The Power of Optimism in Innovation

All right , we are talking SpaceX IPO, the biggest IPO of all time and there's a lot of smart analysis out there . This ain't that . Sam, what did you call it the two guys in a truck version of this, what did you say? Two idiots in the N's one. I feel like I can rule the world and know I could be what I want to . I put my all in it like a day's off on the road, let's travel next . So this is for there's going to be people who are smarter, wealthier, more intechnical than us that are explaining SpaceX , but we promise to be the most relatable analysis you're going to get . Because I wanted to nerd out on this myself, I was like, Should I be buying this IPO? Should I be buying this stock? And in order to do that, I was like, look, okay, let me sit down for a couple hours and just try to understand what even is this business? How does it work? Is this massively overrated? Is it underrated? How should I think about this? What do they even do ? And so that's where I spent some time. Sam was picking through the S one, trying to find some of the more interesting, quirky people aren't talking about this, but check this out, styled nuggets. So that's what we're going to try to do in the next hour or so. I'll just play the character. It's all acting, but what would you just say SpaceX does? Okay, so SpaceX, what do they do? SpaceX builds rockets . I think that's the primary thing that they do. They build rockets, ideally, rapidly reusable rockets, and they can take stuff into space. Now, why do you want to take stuff into space? Well, one version of takes stuff in the Space and the origin of the company is let's take man to Mars. So how do we become multiplanetary as a species? That was , you know, way back, that was the original mission, still a part of the mission. And I guess the origin of that was that they Elon after he sold, I think it was PayPal . After PayPal sold, he made a few hundred million dollars, two hundred million dollars or so . And he was interested and excited when NASA was going to go to Mars. Oh, I wonder where the Mars mission is at for NASA. And he goes on the website, he looks it up, sees nothing about a Mars mission. He's like, wait, we went to the Moon in whatever, seventy nine. We have nothing planned to go past that. Like he's planning a vacation. He's like, hey, so I have some free time. Let's see if we can like take the kids to Florida and like watch a rocket take off. How cool would that be? Exactly. And so he was looking at that, okay, it's not happening. So then he thought, Oh, man, you know, go into space, go into the Moon. That's a very inspiring thing. What if we funded a mission to take, I think it was like a plant, it's like a little succulent or into space and it'll, you know, let's take life to Mars, life, technically speaking because it's a plant. And he thought, oh, that'll just generate some excitement, some buzz, it'll kickstart more enthusiasm around space. And that was the original idea . He goes to Russia. He tries to buy rockets from the guys in Russia, like an old ICBM missile, basically. And they laugh at him, they sort of spit in his face. He real likeize, o ith's shit after two trips to Russ ia, this ain't gonna work . And like any good entrepreneur does, doesn't take no for an answer like any stubborn genius does, he decides, I guess I'll build my own . He took that personally. Dude, when I was a kid during fourth of July, like or like for some holiday, we would drive over the river to go to Illinois 'cause they sold bottle rockets there and they didn't sell them in Missouri . Elon and I are basically the same thing. Just if he is, you know, he's two hundred million times richer and two hundred IQ points higher, but very similar . But I relate. Yeah . If you have SpaceX , so do you know their business model ? What do they actually do? When I was reading through the S one, one of my big revelations was they do so much stuff and frankly I don't ent,ire ly know how it all contributes to the same thing, but I do know that the main reason why he started was that reusable rockets is the best way to make going to space happen because you can make things cheaper. So they, yes, that's correct . So they have, let's say , you know , three core components here . Or I should say four. So they have launches, they have Starlink, they have x artist formerly known as Twitter, and then they have XAI . And four are the four components of what SpaceX currently does with some new things coming online like they have something called the TerraFab where he's building like the largest chip factory in the world . So that's like, you know, what are the chips? What are the chips going to be used for their own rockets? His their own AI . So basically he's got XAI, which is his AI company . And Terafab is basically his way of getting ahead of what he believes is like the chip bottleneck in the world, which is there needs to be more chip production ideally in the United States . So again, if the if the current manufacturers of chips are already booked out five, six years in advance, already at capacity, and the world needs more chips for AI, we'll go ahead and build the largest chip factory in the world the Fab. Sarah, my wife and I, we took a road trip and we stayed at a motel and they only had rooms with two twin beds at the motel eight and she was sad. She was like, I want to sleep in the same bed as you. It's so weird. And so I just got rid of the middle drawer and I pushed the two twin sides beds together and I said, we don't need a king size bed. We have a super bed. And that is sort of what Elon has done with his company. You know? It's all of these he's just made a super bed. That's exactly kind of put like one of the, you know, like what's the little what's the little foot rest thing called? That's like Twitter. He's like, yeah, it'll just be here at the bottom . Because the only downside when you look at the analysis of this thing is that Twitter revenue is like half of what it was when he bought it. So that one hasn't really worked out, but he rolled it together with all this other great stuff so that the investors did well, even though that business didn't do so hot since then. So again , supercompany. Let's hear supercompany. The company's going public right now. It's the largest IPO in history . I believe it's going public at one point seven five trillion dollars , which is very polarizing because you have on one side people who are rational, logical creat ures who look at this and say, Wow, so it's a hundred times revenue. Like that's pretty insane . What are we buying here exactly? And on the other side, you have the cult of Elon and you have people who are bullish on the future of technology who just believe that like in Elon we trust. And it's not about the price to earnings ratios. It's not about price to sales. It's about, you know the pr,ice to Elon ratio. And if it's an Elon company, you're going to have ten times the price you would probably otherwise have in a company. So it's a very interesting company that's going public because it's so huge and you have people who are so passionate on both sides like a sports team or like a religion. And I guess the idea here is can we try to understand what's actually going on and maybe come to our own conclusions? So just to put this in context, the word trillion has been thrown around a lot. Anthropic is about to go public or something like that. It's worth around a trillion or nine hundred billion . Same with open AI. This word trillion is being thrown around a lot. And I want to put this into context a trillion's really, really hard to understand. A billion's hard to understand. A million, a lot of people can understand that. So a million, if it were seconds, a million is eleven point five days . A hundred million, which is an astronomical number. Let's say if you have a hundred million dollars, if you have a hundred million dollar company, that's a really big company . That's three point two years, if one hundred million seconds . A trillion is thirty two thousand years . Isn't that incredible? It's hard to fathom how large a trillion is. That's exactly. And when this IPO happens, Elon will be the world's first trillionaire on paper, at least. ' Andre tal weking two trillion, right? So that's sixty thousand years if it were seconds. That's a lot . That's so that's so large . So okay, so let's explain let's explain a little about the company. So hey, I want to tell you about something pretty cool. We have a database of all of the unsexy business ideas that have been discussed on this podcast. So hundreds of episodes the team at HubSpot went through, they pulled out all the unsexy ideas. So not the super high tech ones , but the simple, relatable , interesting, profitable ideas that we have brainstormed, and they're all available for download for free. Just click the link in the description below. Thank you to our friends at HubSpot for sponsoring this podcast and putting together this free resource for you guys. Back to the show . On the different dimensions that I mentioned, launches they dominate. They're like the Google search of launching rockets. They launch, I think, something like eighty to eighty five percent of all the payload that goes into space goes through SpaceX. There might be a second, yeah, there's a second place technically, but the gap is so large . And so they dominate the launch category. Now, what do they launch? They take satellites up into space , they take satellites for the government, but they also, I think, about forty percent of their launches are just for their own satellites for this product called Starlink. So if you don't know what Starlink is, Starlink is basically Internet service. Specifically, it's really great at giving you internet in places that have shitty internet. So rural areas, remote areas, countries where the infrastructure gets damaged or blocked during wars. Starlink basically gives you internet anywhere. It's great for airplanes . It's great for boats, anywhere you can have internet that's traditionally quite difficult to get. And this star linked business is gangbusters. So it is basically up like you know, it's quadrupled in the last two years. They have ten million paying subscribers to Starlink Internet. It makes like eleven billion dollars a year in revenue. It's like forty percent EBITDA margins. It's recurring revenue. So the Starlink business has like all of the wonderful characteristics of a business. There's no competitors . They have an extreme cost advantage, it's recurring revenue, it's extremely high margin, and it's a product that everybody on Earth essentially needs is the internet and they specifically solve the problem in rural areas. So Starlink is very, very interesting as like, that's the cash cow of this business . Which is new. It's only like four years old, I think . Only like four years old. And there's by the way some crazy story about how like the Star League team, they worked in Seattle and the project was kind of going nowhere. So he's like getting status updates and he gets really frustrated one day . And then he goes like have you ever seen that episode of Entourage Ari Gold walks into the office with a paintball gun and just starts blasting people that he's laying off ? That's basically what they did to the Starlink project. They went there and they just were like, What the hell's going on , nuked everybody, restarted from scratch , and then, you know, it now is like one of the greatest sort of businesses in the world right now is just the Starlink business unit inside of inside of SpaceX. Okay, so that's that's easy to understand. That's pretty straightforward. It's easy to understand. And then you might think, okay, well, how big is this sort of rural internet thing? Well, in the US, there's, you know, probably tens of millions of people who will be subscribers to this, maybe like another thirty, fortyty, m fifillion on top of the ten million that they already have . But then you have all around the world, you know, there's huge, you know, fifty percent of the Earth basically has shitty internet coverage. So we're talking about like parts of Africa and India, whatever. Now, the problem is those people don't have a lot of money. So they're not paying the same kind of thousand bucks a year that people in the US are paying for Starlink. So there's a question about what that's going to be worth. But then they have this other thing called direct to sell. You know about this? No. Okay, so direct to sell is basically if you've ever been, you know, driving and you're like, oh, I just hit my call dropped. I hit a hit a dead zone. Yeah, right. Maybe you're driving down a bridge, or maybe you're just like, oh yeah, this one area on my route to work always has like shitty service . Well , they basically can now do Starlink from the satellite direct to your cell phone . So you don't need the little satellite dish like you need for the home internet service. You don't even need that. Just go straight to your phone. So they partner with T mobile for example . And so in areas where you have crappy reception, you'll still be able to send text messages. You'll still be able to download some data. You'll still be able to make a phone call. And so they're basically looking at this like whether, they, launched their own T mobile, right? They launch their own Starlink, just that's what you use for your cell phone plan . Or it's this little add on to every cell phone plan on Earth where it's like, oh yeah, and for an extra bucks a month, five bucks a month, ten bucks a month. Like you just have guaranteed coverage everywhere. When you don't have good service, it falls back to satellite service. And so they're like, yeah, that's gonna be pretty big because there are, you know, the market for, you know, internet services across cell phones and home internet is like two trillion dollars or something. And they actually have and by the way, there's no differentiation really between any of these. If you go to T Mobile or AT and T or whatever.' Theyre all verized, they're all essentially the same. Which commercial do you like best ? Exactly. It's all the same thing. Who like you know is Patrick Mahomes like your favorite player or you hate him. It doesn't decide who you go with. And so they're the first ones to go into that space with something that's actually a different proposition, which is like, hey, our service works everywhere. Those don't. And secondly , you know, it can be lower cost because of the way they're doing it in space. They don't have to do ground buildouts of towers . So that's kind of like the kind of core business. They got so good at launching rockets that it became cheaper and cheaper. I think they basically brought the cost of taking like a kilogram to space down by fifty or one hundred X what it was pre space X. So they have like a, you know, if it cost a hundred dollars before, it now costs one or two dollars, right? As an equivalent of like the biggest how big the cost drop was. And they keep doing that. So wherever they are today , when they have their new rocket starship, it's going to be half of what it currently is. So they're just like have a massive cost and volume advantage in launches. That lets them have the satellite business, which lets them have Starlink. Okay. So that's kind of the business as it is today . Then you say, well, what's the next unlock? And if you look at their investor presentation , it's all about data centers in space . And you're like, you know, when you hear this, you think , I don't know what what you think the hell you know, you think about like buildings floating in space? Yeah, it's hard to fathom. I think like we're colonizing the Moon or Mars or something like that. But I also think like is there not enough room here? Like it's sort of it's unfathomable. So that's hard to understand. The answer is we got plenty of room . It's hard it's a little slow to build and expensive to build. And there's some shortages like in turbines and things like that to build. But the real problem is literally just red tape . It is easier to figure out how to launch the heaviest rocket ever and build a data center in space than it is to get like, you know, Alameda County to approve of a data center in your backyard . That is literally the problem. That is there is so much regulation and so much anti data center backlash that the people who even have the money and the engineering chops and the power and the reserved equipment to be able to build , they can't build in the United States, which is kind of insane. Well, what's you know what's really so think about this? So I'm a history nerd. So one of the reasons, one of many reasons why the American Revolution happened was when American colony folks they started taking over what is now America. They started going further and further out west . And they started having a lot of fights with Native Americans. And the colonists were like, Hey, England, like we need some help. We're supposed to be your country, come protect us. And England's like, dude, it's so far away. It takes us four weeks to get there. And plus once you're there, it's like three thousand miles long. We can't do this. You guys, I know we said that you can go everywhere else, but please, you gotta come back in. And George Washington was like, No, this is my land. This is my land. You're not going to tell me what to do with my land. Screw you guys, and that was one of the reasons why there was tension. And it sort of begs the question that when you go the figurative wild west space, when everyone's doing their own thing, what's going to happen in fifty or one hundred years when people are like, okay, now we actually have to like rein this in. What are we gonna do? Who gets what? Because and that's actually another thing that's quite challenging to understand. It's sort of like sectioning off the ocean or water or something like that. Like who gets what area of space or Mars or Moon? Well, the Moon, I think, definitely, right? Because it's actually like a limited land area versus space , which is , you know, the biggest thing ever. I don't know, I don't know enough about this to know like what's true, but like are there like highway routes that satellites take where it's like, you know, this is the best this is like the best route and like, you know , we can only have so much like debris in the US I don't think so. I mean maybe maybe there's some future state where space travel is so cheap and easy that so many people want in and the demand is so high that now we're running out of space in space like maybe, but like that's not the problems today. The problems of today are, wow, it's really expensive and hard to get permitting to build on land . So it's it's such a like, I'm going to take my ball and go home or just like the, you know, men will do anything to avoid therapy type of conclusion of space. I guess we'll just go to Spild in space then. I don't even want to talk to it. Like I want I want so little to do with politics that I'll rather build this in space and figure out deal with the engineering. So the big risk of this company right now is two questions. The first is are they going to be able to build something called Starship? It's like their big ass rocket, bigger, way bigger than the Falcon nine . And so I think it carries like seven to ten times more payload than the Falcon nine . And so if you know, Falcon nine is bringing up what let's call it ten satellites at a time. This thing will bring up seventy satellites at a time . And so they haven't yet been able to get Starship to work . They're building it, they're testing it, it's taking years . When they do it, it'll be the most impressive rocket and probably the most impressive feat of engineering in human history. But there's a question of if so on some people might not believe that they'll ever get starship to work. That tends to be a foolish bat . Yeah. Betting against Elon's technical ability has proven to be like the most unprofitable bet you could make. Even if you're right for a year or two, you're eventually wrong. And so one question is is Starship ever going to happen and can they make it rapidly reusable so that it could fly? Like he was talking on a podcast and he was talking about it like, yeah, we're gonna do whatever, ten thousand launches. And the guy was like, So wait, so that means like you're launching like multiple times a day ob,viously , right? Like you're launching thirty one times a day . And he's like yes . And they're like , but you can't even launch one right now. He's like, yes. And they're like, so it's gonna be and he's like, it's like an airp ort. You know how many times a plane takes off a day? And he's like , we are going to launch that many times in a day. It'll be like airports. It'll be like, you know, we figured out how to make cars reusable how to make airplanes reusable. We are going to figure out how to make rockets rapidly reusable so you can land, turn it around, launch it again, land, turn it around, launch it again. Just like airplane lands, they clean out the get your crumbs off the seat and then they go and forty five minutes later it's up in the air again. And that's like a key part of how air travel became cost effective. They're trying to do the same thing with rockets . And so one bet is is the star ship thing ever going to happen? And then if so, there's another set of doubt or risk or uncertainty , which is , can you even do data centers in space? This isn't even gonna work . And there's people who argue that one of the reasons you put it in space is not just the red tape, it's the cost. So basically one way of thinking about this that Elon talks about is that the entire game is taking energy from the sun and turning those like photons basically or electrons into tokens for AI . Like that's kind of like the pipeline. That's kind of the world where the world is going is we are going to need an insane amount of AI tokens, whether that's for, you know, chat GPT like things, whether that's for digital employees work that's being done, whether it's for science and medicine, whether it's for robots, like we're going to need a shit ton of AI in the future. It's pretty hard to bet against that. So then the question is, who could be the low cost provider of tokens? And basically, if you look at when you have a satellite in space, it's powered by the sun . You don't need any cooling because space has like, you know, space is basically freezing cold and has like a radiative , whatever cooling mechanism where as the chips get hot from being used, there's like a natural physical mechanism to cool them down. Some people argue against that, but Elon believes it's no problem and that basically streaming AI tokens from space is going to be far cheaper and more effective than any land build out of data centers and then figuring out how to transmit those. And the physics, the paper, the paper papers, the question is can they build it? And historically , Elon is very good at doing this. He's very good at taking no market risk, meaning if I could make this, you'd want it, right? And it's like, yes, the only question is, can I make it? And the answer for him has always been yes. And so that's kind of where we're at with this business. This string of letters that we're putting together to make words into sentences is like the words that are coming out of your mouth right now are wild to me. I just like I'm just like learned German yesterday . Like it's just the fact that language has changed so much that in the last five years it has come to the point where we're now saying we're going to go to space to create AI to imagine explaining this to someone. There's this old man that I hang out with in my building who's ninety six years old and every time every once in a while I go down to his room and he tells me like where he was when JK diedF and tell me he'll cool stories. Just imagine like explaining this to him. It's like, well , it's just crazy how fast humans pride How old your daughter she's two? Yeah . Okay, so you haven't quite reached this point, but like my kids are like, how does TV work? And I'm like, honestly , I have no idea. And they're like, you know, so wait a minute. So this is happening right now somewhere else. I'm like, yeah, there's a guy with a camera. How does the camera work? Couldn't really tell ya , but he's got something called a camera and that sort of gets like piped into like those towers. There's like cables on the road. You see those? And there's like satellite and then like there's wi fi . That's a tough one too for me. Bluetooth, kind of like WiFi, but something 's different there for sure . And it's showing up on our TV and where's the remote? I've had an experience , you know, I've been humbled by my kids so many times trying to just even explain the current shit that I don't understand. Yeah, like, I wonder if these like analysts who are asking questions like Like do they ever just say like , you know what I mean? Like I don't know . There are so many things that boggle my mind about, you know, today's technology. So I'm with you that like this sounds mindling that's crazy, but I'll push it too. But also that someone is audacious enough to keep pushing, like keep what, okay, we did that. What about this? What about this? What about this? Right. And to have that open mind, it's these are engineering feats, but these are also personality feats. Just like when Joey Joey Chestnut ate seventy hot dogs at the Coney Island Hot Dog contest when the previous record was nineteen, that's what we're dealing with right now. And it's just unfathomable. It really is. It truly, truly is. Hey, let's take a quick break. You know that feeling when strategy is done, the brief is written, everyone's aligned, and you realize someone still has to sit down and actually create all the content. That someone is usually you and it's due tomorrow. Well, the Breeze assistant from HubSpot can help. It works right inside HubSpot. You can draft campaign copy, blog posts, emails, all in your brand voice, all using your actual customer data. So you don't create just content, you create content that converts. Check out HubSpot. com the, Agent ic customer platform for growing businesses. What about Twitter and XAI? Okay, so that's kind of insane to me . The fact that a rocket company owns Twitter . Yeah . You know, when you invite someone to your party and then they bring that friend yeah, that's kind of kind of the Twitter problem right now. And I think it was sold for two hundred fifty billion dollars to SpaceX , is that right? So I did a lot of my thinking with Claude yesterday for this, and I had Claude build me my own deck about SpaceX. Here's one of the things about Twitter. So Twitter's ad business is forty percent the size of old Twitter . So ex advertising is at one point eight billion now. It's down one hundred million from last year and it's half of what the ad revenue was before he bought it in twenty twenty one, five years ago. He added subscriptions and payments, whatever. So that's now a billion dollars in AR . So the total , you know, is two point eight billion and it was four point five when he bought it. So this stuff has, you know, has not quite worked. He did figure out how to spin it, right? So he figured out Hm , okay, the X business is not that great. And I can't get the engagement to be as high as WhatsApp or Instagram or TikTok or any of these other apps. But what it does have is data. And maybe I can use that data to power Grock. And then he tried Grock. Now Grock is falling behind anthropic and Chad GPT. So he said but he again , you know , I think one of the great hallmarks of entrepreneurship is basically failing forward . And so maybe in the same way that X sort of failed forward into like, oh well it gave Grock some differentiation, but then Grock hasn't quite kept up with everything else. He used his Grock asset where he's trying to build a Chat GPT anthropic competitor, even though it's way, way behind. He built the largest data center for training AI, Colossus . And he's really good at building the machine that builds the machine. So he's really he's basically the one he's the best at is building factories at this point . And so, you know, Tesla has its own factories and produces , you know, an enormous amount of cars faster than anyone else designs and builds. He's doing it now with the Terrafab. He does it with the rockets. He did it with data centers here. So he built the largest cluster of GPU's bigger than Google, bigger than Facebook, bigger than anyone. The problem is he doesn't have enough users . So he has this like, you know, he bought a huge mansion and doesn't have any friends to come over to entertain. Well, because what does Twitter have? I think you say five hundred million. That's shockingly five hundred million is still, this is amazing, a niche social media network. Yeah, and Grock has a hundred , you know, one hundred million users whereas Chatupedi has a billion, so ten times smaller . And so he doesn't have the use of it. So what did he do? He just turned it into Airbnb. He started renting out Colossus to Anthropic and to Google . And so just in the last, I don't know, two months, they announced two deals that I think are combined worth like twenty billion dollars or more, a billion dollars a month, so twelve billion dollars a year to use his data center. And that's Google. Google themselves was the best at building data centers. And they need to rent from colossus. And then same thing with Anthropic where Anthropic is paying, you know, over a billion dollars also a month to rent out. Now these are short term agreements. They can cancel with like ninety days notice. So who knows five years from that? It might just be a temporary stopcap solution. But again, failing forward, like figuring out like, okay, are we fucked? No, what if we did it this way and then finding a way to survive in advance . Yeah, they basically like they put the sess one out I think four or six I forget when one or two months ago and I think it was last week or maybe a Monday. It was almost like a quiet amending of the document that says, hey, Google just signed up to spend a million dollars a billion dollars a month with us to become a customer. And yeah, that's insane. That's such a huge number. By the way, I have to thank the ninety chess move there was that they knew and they staggered the they sort of staggered the announcement. Maybe it was truly oops forgot to mention this, but I think it would have been smart if they intentionally did that too. Yeah , it was cool . Do you want to see any of these slides by the way? Can I just can I just run you through these and did you have a sit down with your wife and you're like, Okay, so hear me out and you showed her like every slide . No,, you're that's you. I'm doing that with you right . I told it to explain to me like, I'm Charlie Bunger trying to understand the business. And it's like okay, Charlie Munger would ask , is it my circle competence? How do I lose money here? Show me the incentives. What's the prices price of what pay you the v,alues what you get. And so started to basically break it down. Starlings is the part that makes money. XAI is the part that burns it, and the rockets are the railroads in between. You're not buying space, you're buying three different companies that are staple together. You have the space launch business, the conn et connectivity business and the AI business . And then here's the high level numbers. So eighteen billion in revenue , losing two and a half billion , six point six of adjusted EBITDA. I want to bring that up at a second. Yeah, I think that's a that's wack. They burned eight billion cash last year . This is the Starlinks business. So it grew from two million subscribers to ten million subscribers. But you can see like it is starting to slow down. So that's like one cause for concern was that you know Key one this year was was not high growth and that the average revenue per paying user as they go into like more third world use cases of who needs who needs internet where they have low connectivity? Obviously, they can't charge as much. They dominate the rocket business, eighty five percent of all launches, eighty percent of all mass to orbit . Let's see, everything is dependent on Starship, which is not a guarantee. And that's the big the big, question. And then oh, they also bought cursor. So they bought cursor for sixty billion have a option to buy a cursor for sixty billion and cursor I think is that three or four billion in revenue. And so like, again, trying to play catch up in the AI game by merging. You know, Cursor needed to figure out a way to have compute and their own models and a way to survive against Codex and Cloud Code. And so like, you know, it's this sort of game theory where the bottom players like and survivor will form an alliance in order to like to flip the game on its head basically . Let's see if there's anything else here. Oh, he owns forty two percent of the company. Do you know this? Wow. No, it's amazing. After twenty years , and you would think Rockets are like the most capital intensive business that he's had to raise for, for him to still own forty two percent, just to put that in perspective. Like Aaron Levy from Box, which is like cloud, you know, a folder in the cloud, I think he owned four percent of Box when it went public. And he somehow still owns forty two percent and has eighty five percent of the voting control. Like it's unbelievable. Yeah, some other things about his compact, which is pretty crazy . We can go there, but anyways, AI says Charlie Munger would put it in the two hard pile. It's a wonderful business at a silly price is the AI Charlie Munger conclusion. And it's a great business. You can admire it from afar. You didn't need to own. It was the conclusion that he had. It's just logic doesn't particularly matter . I don't think like I don't think that you can use like a traditional way of looking at this . An Elon asset is not a normal company . So it's really it's hard. It's hard to price this. It's almost like this weird thing where I always thought it was interesting. Whenever you're like going through an M and A process, someone will say like, you know, I'll buy this company for fifteen times earnings. And what I like to do is change earnings to the word years . So it's like, I'm gonna give you fifteen years of your pay ment up front. And when you look at this, you know, the present value of a company is the sum of its future cash flows. When you look at this, you're like it's hard to I don't even know what it is. Is it a hundred years? Is it hundreds of years? Is it fifty? I'm not sure, but however the length of it is, at this point, it's so big likely that it's like, will Elon die or not? I think the crazy thing about this and even when somebody why would somebody pay fifteen years ahead? It's because you're growing. And so yeah, it's fifteen years at the current rate, but looking at the growth, that might only be six. It might only be four. Might be right . The growth rate is dependent on like you're making the Elon , which Bet iste can he figure it out? But I'm like, I don't even know if he exists by the time that like you get the sum of your future cash flows on this one. Well, here's what you'd need to believe. You'd need to believe that the Starling business alone , which is at eleven billion in revenue, is probably going to grow to thirty, forty fifty billion in revenue over the next, let's call it five years. You'd need to believe that Starship works and that they can take , you know, so they can scale both Starlink as well as the data centers. So you need to believe that Starship works, you need to believe that data centers in space are going to be a thing . And with that, you'd have to also, I don't think this is as much of a you need to believe as in it's not really a leap of faith, it's more of a realization, which is Saudi Arabia made trillions of dollars because they owned the oil. They were the largest and lowest cost producer of oil and energy. And the world ran on energy. Well, if you look at the next twenty years, it seems like the world is going to run on compute . Every single business , every single consumer, every single robot, every single car, every single appliance is going to have a compute need . And so then there's a question of who's the Saudi Arabia of compute . And what you would be thinking with if he goes to if he's the one who could put data centers in space and data centers in space are going to be giving AI tokens at a maybe , whether it's fifty percent or two hundred percent lower cost than ground based compute for inference , then he's Saudi Arabia in space. And he's the only one position to do that currently. So they have a line item or a section of the S one that talks about future business lines . And he actually says that mining asteroids is and potentially mining Mars and mining the Moon for energy. And I guess that potentially means some type of oil or something like that. And so they actually have that covered as well . Yeah . Of course, naturally, mineral mining. Listen to this. So this is actually a super interesting thing. So listen to what the company's mission is. The mission is to make life multiplanetary and understand the true nature of the universe and extend the light of consciousness to the st . And then it goes on to say that they want to create like a species level redundancy, so consciousness isn't tied to one planet and that they don't want humans to have the same fate as dinosaurs. That's what it says at the top. That's the mission of the company. Is that crazy? What's the Hampton mission? Let's just put those side by side . Like, you know, to connect people , but like the for ninety nine percent of the people, the mission of any business is to take the money in your bank account and to put it into my bank account. Okay . So it's really challenging for me to compare this to, make life multiplanetary and make sure that we don't have the same fate as dinosaurs . This isn't fair . So that's kind of incredible. Also, I've met a few doctors surgeons that have like kind of a god complex . And in some ways it's like, look, if that's what it took to get you to become the best you know, I actually want my heart surgeon or my brain surgeon to have a bit of a god complex, a bit of a savior complex. I don't mind that he's got a bit of a god complex, a bit of a savior complex. It's okay. That's what it takes to be like, hey, you're already the richest man on Earth. You want to sleep on the factory floor you want to go ahead and build these and put it all on the line again . It takes something that is irrational to make man want to do that . And that could be noble , or you could read into it like it's kind of a bit of an insecurity personality defense. No, that's not what I'm getting at. I wouldn't say that I'm a huge like Elon Fanboy, but I think this mission's awesome. No, I think it's great. I think it's fantastic. I'm not mocking it. I think that it's incredible. I think it's inspiring. I think it makes it eas ier to inspire your employees. There's the famous story of like someone talking to the janitor who worked at NASA in nineteen sixty eight that you performed to the moon. And they said, Sir, what do you do here? He goes, I'm helping us get to the moon. Like I think that',s awes ome. I think the Wall Street Journal had an article on the blue collar workers at SpaceX and how much money that they were gonna make on this. And they all seem incredibly inspired. So no, I'm on board. I think it's awesome. So look at I don't know if you saw this, but SpaceX IPO is expected to create over four thousand new millionaires, including some cafeteria workers whose compensation packages included employee stock options. And then and the SpaceX lunch lady she was Dude, that's so crazy. Yeah, I think it's great. The amount of wealth that's going to be crazy, I actually wonder , I don't know enough about economics, but like with all these new rich people being created with anthropic J upitians SpaceX , I wonder what that's gonna do just to housing prices. Obviously, San Francisco is insane. Have you been seeing anything in San Francisco? My sister just sold her house, but it was like pre the IPO chatter . And she literally she didn't put it on the market. She bumped into a real estate agent and was like, I have somebody who's looking. The guy walked in literally. This is not an exaggeration. He walked in for five minutes without his wife and made an all cash offer on the house at like what they were going to listen at. And that was it. It was done. He literally never came back even and bought the house. I've never seen anything like it. It's just crazy. I wonder what's going to obviously the coastal cities are going to like, you know, things are going to change, but I wonder what it means for the rest of the country. What's this say? So poor one out for Sam Bankman Fried. He's on the there's a lot of winners out of this IPO. He would be one of the los ers out of this IPO because he had an investment in SpaceX that would have been worth fifteen billion dollars and his overall portfolio, he had anthropic, which would be worth eighty billion dollars because he was one of the earliest investors in Anthrop ic. He had Robin Hood, which would be about five billion . He had Cursor. He was one of the, I think he was literally the first investor, maybe in the first round at least. And that's a that would be a three billion plus stake. He's got SpaceX fifteen billion dollars solanified five billion . And his overall portfolio out of what he has his slush fund that he was inappropriately using, illegally using customer funds to go invest, it'd be one hundred fourteen billion dollars today. He'd be seen as one of the greatest investors of all time . Who gets owes? Who gets the shares? So they liquidated all these when they did the bankruptcy. So nobody won, actually . The people who bought out of the bankruptcy estate , it's kind of like when Tim Draper bought all that bitcoin at a low price from the US government when they seized the Silk Road Bitcoin It's whoever bought the bankruptcy the assets out of when they did their liquidation, that's who won That's insane. One thing that I want to call out and I don't have a good explanation for this, but they talked about in the S one about having like, okay, so the way it works is you see this , you see EBITDA, which is earnings before, interest , taxes, depreciation, amortization. Then they do this thing called adjusted EBITDA , which in my opinion makes no sense . I guess there's a lot of reasons as to why they do it, but the best way that I could explain it is, you know, every month, my wife and I, we sit down and we look at our budget . And we say, how much did we spend last month? Is that in line with what we predicted? Whatever. And so that can help us predict future expenses and let us know that we're keeping to our financial plan . Every once in a while or rather in the first six months of us doing this, we kept saying to ourselves, well we took this vacation, but like a one off. It's a one off. You know, we took our parents on vacation. It was celebr to ate this thing. And then in month six of doing this, we're like, you know, we just took this other once in a lifetime vacation. And you know what? I think we just have to like assume that we're gonna have these like one off things, gifts, vacations, buying a car. So we just got to up the budget and that's what we're going to do. Adjusted EBITDA is just like saying, you know, you had this one time lawsuit or this one time and I think in the case of SpaceX it's about depreciation, which doesn't exactly make sense. They're like, we're going to have this one time depreciation. I think that's what it said plus earnings before interest and depreciation. I don't understand why you would add the adjust it doesn't make sense to me. Does that seem weird to you? No, I mean, I think spot on. I think Buffett Munger famously hated EBITDA as a thing. I think they just called it bullshit earnings. It's like it's like our earnings are this. And then our bullshit earnings are this and especially in a company that's so capital intensive. I think they had like twenty billion of CapEx spend in the last twelve months or something like that. Obviously depreciation is very, very real. I think for software companies, you know, it could be a little bit different, but this is not a software company. And then the adjustments you're right, you know, it's like, oh, except for we adjust back in for stock based compensation. It's like, well, that's how you pay the people to do that work. So why are you keep why do you keep adding that back in? Is that going away anytime soon? Not really. For example, it might be the go public costs. Sure , that's an adjustment . But the adjustments tend to be far more favorable than that. I think there was a few other funny things . I think they own like two billion dollars for the Bitcoin. And I think some of the adjustments was that Bitcoin price has gone down . Did you see that? That's what I need, dude. I need my adjusted net worth. It's just adjusted for my stupid ass investors. . And then funny thing was they did a pro ject where they paid a vendor in shares and the strike price of the shares was like four hundred twenty. I think it was like forty two dollars twenty cents or something like that . And then I think that when they did like a four hundred nine A valuation for Twitter, it was like, I'm screwing up the exact numbers, but I think if it was forty two billion dollars they made it like forty two billion dollars like four hundred twenty. And like if you do like a control F four hundred twenty and , it's all it's everywhere and that's kind of insane. It's the most try hard part of Elon. I despise his four hundred twenty obsessions. Is there a hitchhikers? I've never read hitchhik guideer' tos Galaxy. Is there like a four hundred twenty is this like a weed four hundred twenty reference or is this four twenty thing? Yeah, it's a guy I'm cool too, right I think it's for I think in H theitchhikers guide it's like forty two , that's the number for the universe, but that's not, I think, why he's doing four hundred twenty. Okay , well , yeah, I wasn't sure, but that's pretty silly. What's this? Shout out to the Ontario Ontario Canada Teachers Pension Fund , which in twenty nineteen decided, you know what? We're going to slang an investment into SpaceX back before SpaceX was pretty obvious and they're going to make twelve billion dollars this year and in the IPO , which you know, more than funds their pension, it's thirty three thousand dollars per teacher that's in the in the fund for the three hundred something thousand teachers that are that are in the in the pension fund. So I think that's pretty cool and a great move by the Ontario Fund, which is also hilarious because I'm pretty sure they like boycott Elon , but like, whoops. Yeah, that's pretty hypocritical. Did you put an appendix on your slideshow with just funny tweets? Because that would be wonder ful. Yeah, this was manual because Claude don't have that sense of humor that I have, so I had to do this work myself. I'd tell you a couple other nuggets that I thought were interesting. Yeah . Did you see who else is on the cab table? No, not really. So I'm always interested with these IPOs like who Joe , I don't know. This episode this part of the episode is brought to you by pocket watchers. I wanna know who else is getting rich out of this. Of course. And dude, when I was watching the Nix game the other day I kept pausing, I'm like, zoom in, I'm like, who's who courtside? Who's that person? Who's that person? I'm begging for this courtside app. I just want somebody to take a picture of the entire courtside seats and tell me who everyone is, what they do and how they made the money and I'd like that for every single game and like at least a life game. The slipperi the guy the more I want to know because I would zoom in and like, yes guys show me move your head. Who's that guy? Yeah, it's like I get why you're famous you're hot. Who's the guy with the triple chin that's courtside and new balances? Yeah, like how much waste management does he do? Yeah . That's what I would that's all I want to know is who's the shlepiest looking ? Not even the New York ones when they're playing in San Antonio or Oklahoma . I'm just like, oh, what is that? Oh, he , you know , he collects all the used chicken wing bones from restaurants all around the country and turns it into bone broth. Like, that's what this guy does. There's a funny video of this like guy who looks exactly like you're describing. I think it I forget exactly where it was maybe Canada, but Drake's sitting at the game and this guy and Drake are sitting next to each other. He looks like he's six years old. He's got a beer belly and you're just sitting there and he looks like he's like laughing hil ariously. And they put the camera on Drake and everyone's cheering and the guy looks over to the Drake and he goes, are you famous or something? And Drake was like, yeah, I'm kind of famous. And then like the meme actually found that guy's identity and he's significantly wealthier than Drake and he's like this big shot who no one knows and he owns some type of like boring business and it was pretty funny. By the way, that's one of the only cool things you can say to a celebrity. Like I've actually played the scenario out in my mind many times of like how do you see if you actually see someone really famous like if you avoid it, flame, no story. You go up to him and you ask for a picture . way No. You walk away with a picture and no dignity. You annoyed them. Like, do you go tell them you're a big fan? What do you actually do? I think what you just said, which is like, are you famous or something? It's great because then they have to be like, yeah, I'm Drake. I'm a then they just have a blank face like I'm a rapper. They're like, okay. And they're like, and you have to start justifying yourself. Like that would be great. I want to do that to Drake. Dude, six months ago, I saw this guy in the street and he was a cool looking dude. He was young. He looked around my age and he had this beautiful dog with him and I was out to eat like on the street like we were at a sidewalk table and he was just standing there. It looked like he was waiting for his wife or something. And I walked over and I'm like, man, that's a beautiful dog. I had a dog that looked just like that. And I showed him photos of my dog. I showed him my tattoo. And I just learned I hung out for twenty minutes. He's like, Yeah, I just moved here. I'm so like in New York City, this and that. And I was like, cool. And these people were like staring at him and I'm like, are you famous? What are you doing? And he goes, Yeah, I just I play for the Knicks. My name's Landry and he told me his last name. What's his last name? Is it Shamit? What is it? Chamet. Dude, I totally had the opening. Like his wife came over, my wife was talking to his wife. We totally had the opening where I could have like exchanged. You could have noticed he's six five . No, I didn't everyone in New York is like gun looking and striking like and I just thought he was a dude. And you didn't notice he looks like the original Jesus. Like does he look like Jesus ? I don't know, man. He didn't like, it's Jesus. That's why everyone's staring. He didn't look like that. No. In real life, I'm surprised you didn't tell him like sorry everyone's staring. I have a podcast Sorry if you do that. Twitter doesn't want the mix . No, I literally sat with him for twenty minutes talking about his dog. And like there was totally, by the way, some chemistry going on where we could have like, you just moved here, I just moved here. You know, which should do what it did? Intertwin and you left it that way for it . And I thought he was like a walk on. I thought he was just like a you know, like the lucky guy. And then I see him last night and I'm like , my entry . It was good, dog My brother in law has a great move. He pulls with famous people where if he sees them , he just like he saw Mike Tyson once and we were walking and he just goes up to him and he's Mike, what's up? Man, good to see you and he just dabs him up and he just says good to see you, like as if he's seen them before. And then they're like, who's this guy? Seems like he knows me. I must know him. So they just treat him really well and they just dap it up and they move on with their day . And I've seen him do this now four or five times. And I have to say this is currently like the best move that I've seen anyone do with these people. I use my kids now. I saw Tom Hanks recently at a pizza place and it was just me, my daughter, and him at this pizza place . And I was like, I don't really want to like approach him, but like it's kind of the greatest guy ever. So I let my daughter walk, I saw which way he was walking and I was like, Naomi walked that way. And she walked and like intercepted it and like intercepted it. And he was like, oh hey little girl, how are you? And he started talking to her and I was like, yeah, got it. And so I heard his voice and it was awesome. So I do that now. You use your child as bait. Yeah . Naturally back to who 's famous on this list . I'm going to read your name. If you even know who this person is. Antonio Gracius He's like his buddy who like started a hedge fund. Yeah, so the second biggest shareholder of SpaceX is Antonio who owns about seven percent of the company. He's the only one over the five percent threshold as an individual, I think . And it's through he has this thing called Valor. And basically, Antonio's in Elon's biography a bunch, which is he had been like, I think post business school, they started like buying like businesses that did manufacturing but weren't being run well and like a meat packing business or stuff like that. And so he just got really good at like running and operating businesses that had manufacturing or production facilities . And so when Elon needed help with like early days of Tesla or early days of SpaceX , he would just bring Antonio into like, you know, can you help me figure out the bottlenecks and the production line and the factory and like how we should be doing things differently? And they kind of both like, he became his study buddy for ramping up production. And Antonio was always there to help. There's a story about how when Tesla was like on the brink, he loaned Elon like , I don't know, a million dollars or something like that. Personally, not for any equity, just like you need it. Here you go . And so he's going to make like ninety billion dollars in this god , which is incredible. There's also a guy one time when I hosted a hustle con dinner at your office. There was this guy named Steve who came . Today's podcast is brought to you by my friends at Mercury. 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Banking services are provided through Choice Financial Group and Column and A members FDIC . And back then, I knew Steve Via my friend Neville. He owns this thing called or helped start this thing called Gigafun. Have you heard of Gigafun It's a fun started by two guys, Steve, who is the I'm acquaintance. Luke is the other one. So Luke is one of the PayPal founders, I believe , were founding team members. And Steve and Luke got this thing going. And at the time, I don't know if they described it this as this, but it was pretty much it was called the Gigafun and it was just fund Elon . And this is me talking, not them, but they would say like we're just going to raise money and invest in Elon. And I believe they're one of the big shots as well. But Steve was actually at your office. I don't know if you knew that. I did not know that because even though you hosted events in my office, I didn't really get the invite all the time to go attend them. That's not true . I wasn't working. I wasn't working. I want to read you an email I have opened right now an email from somebody who used to be at Founders Fund . And Gigafund spun out of Founders Fund. Luke was at Founders Fund and then he left to start Gigafund. So the email basically says, you know, one of the smartest and bravest things I ever saw someone do was when Luke was at Founder's Fund, he just kind of like sat back and realized that the optimal way for him to invest was simply to just back every Elon company and that's it, take all the money and put it into the Elon companies. And at the time that seemed like , you know, kind of crazy because Elon was doing pretty crazy companies. And in addition, it also seemed not sophisticated, which I think is the underrated part of this and actually the part that's more interesting to me. Like if you if you look back like the last fif teen years, all you had to do was buy like Google and Facebook and Amazon and just sit on your hands. You didn't need to do anything. Yeah, Bitcoin and Chill. You didn't need to do anything. Like we all want to do advanced complic,ated , smart, sophisticated sounding things , but in reality, if you just pick the right, you know, pick the right horse and in some cases like what I'm talking about with Google and Facebook and Amazon, these were obvious horses. These are not like, it was not a surprise to anyone in twenty ten that those were gonna be important companies over the next fifteen years . And you just had to not do other shit . Famously, you know , Bill Gates selling his Microsoft Stock. Bill Gates would be the wealthiest man in the world had he just not sold his Microsoft Stock. Chimoth laughed after Facebook, you know, started his own fund and then started doing SPACs and bought the warriors and he's done this this and that and and that and this and that, all he had to do was just hold his Facebook stock from and he was an employee. He would have done better than everything he's done since then. So we seek out sophistication, we seek out activity , but simplicity is actually , you know, the more powerful thing if you if you get it right. And so he was this email basically says like, I remember when he said that, I remember whatever he was thinking. And a chain email like announced that he was leaving and he sent it to his buddies? No, no, this is somebody who was at Founders Fund just emailing me telling me about this And so and it was kind of stuck with me. And now when I'm looking at this filing and you see Gigafund and Luke Luke NoSek. Oh, they're listed. So they have a huge stake. They have a huge stake. Got it. I was never sure how big it actually got. But I remember Steve , through a friend of a friend, someone was telling me Steve's story, and he was like, he had this company that was like doing really well, but he kind of quit it to just do this. And I'm like, that's it. That's all he does. And I remember , I had the same emotion. I'm like, But why would he there's gonna be more to it? And obviously that you should also do XYZ. It's like no, actually you should not do XYZ in addition. You should just do the one thing. So I thought that was pretty funny. Steve Jervison is who I thought you were going to say. Do you know Steve Jervison? Yeah, I do. He started DFJ like a fun. Now he's got his own fun future ventures . I've met him once, really surprised, like just a really nice guy. A lacky like silly lacky future, future, a true futurist. And if you go, I think a fun, interesting read is go Google , if you're a true business nerd, go Google Steve Jervison and go look at his flicker . That's right, flicker, like the old photo sharing website. For some reason, he's like an amateur photographer. He loves to like he would go and take pictures of the early rocket launches at SpaceX and shit like that . And like, you know, the first Bitcoin mining rig, he'll go take a picture. And he's talking about Bitcoin back in twenty twelve. And he's excited about Bitcoin. And he would basically take a photo p,ost on Flicker and write like a mini caption that was essentially a blog post about why he's really excited about a certain technology. I've actually learned a lot just by going and reading Steve's Flickr . I think there's very few true like futurists in the world and he's one of them. And he was one of the earliest investors at Tesla, earliest investors at SpaceX never sold a single share , which is the other remarkable thing is to hold through all the ups His wife , Genevieve, was my boss at my first job ever. And so I knew Genevieve very well. She's cool, yeah. Yeah. And she and I'm friends with her on Facebook. And so like, I've seen like this whole thing and like you know, I see all these like cool photos of what they're doing and it's like going to rocket launches, this and that and it's been really cool to like see behind the scenes a little bit of that. And so that's been kind of funny as well. Yeah. And you I know think, there one of the reasons on this podcast I try to be more optimistic and benefit of the doubty with I don't know, technology and feels like yeah, a lot of people get things wrong. Yeah, a lot of people build dumb stuff. Yeah, a lot of stuff doesn't work. That's pretty obvious. And I do that for two reasons. One is I have this phrase, which is like pessimists get to be right and optimistic get to be rich. If you hang out in Silicon Valley long enough, you realize that pessimism is a losing strategy when you're around innovation and technology. It pays to be an optimist. That's the first thing. The second thing is I had a friend recently who had a family member who was dealing with like health issues and had that like, you know, health issues for decades. And this kind of like it was resolved , I have to live with this. And then on our podcast, we've talked about that guy from a GitLab who like is curing his own cancer using AI and that sounds like futuristic, but like he actually, you know, did it. It's not like not like a theoretical thing. Like at least at least one person did it. And so he went back home recently and on the east coast and was like, hey, I've been talking to Claude, and I got some ideas. We could try this. And if I get this data, I can feed it to here and I could do this. And what I told them, I was like, you know, it's not that, oh, there are different types of people. They resist it and we don't. We are in the bubble where you hear about people doing these remarkable things . It becomes normalized. It feels possible. It's like the Roger Bannister four minute mile type of thing. Like once you hear that somebody cured their own cancer with the eye, guess what? You're gonna approach somebody a loved one with cancer very differently than you would have if you had just not heard that that was possible. And one of the great things about hopefully listening to this podcast but also just generally being around , ambitious, interesting , innovative people is that you get that normalization of what's not normal. You get to hear, you get you get your frame broken enough where you will, in your own situations of life approach it slightly differently. And, you know, because I think part of this is like, you know, it's just Elon glazing and it's SpaceX glazing, but like another part of it is like damn, this dude literally called his shot twenty years ago , learned, you know, self taught, learned how to build rockets and recruit this team . It did what was, you know, pretty much impossible. And then today's, you know, the biggest tech IPO in history . You have to, you know, respect that and also like forget about how good it is for them , but like let it break your frame a little bit so that in your life when opportunities strike or an idea comes, you don't count yourself out. You don't miss that opportunity. You don't ignore what's in front of you and you actually take action. One of my biggest takeaways living in of Silicon Valley for ten years was to use the word mostly and almost more often than not. And what I mean by that is I used to say things like that will never happen or that cannot happen, or that's impossible. And then I then I started changing this to where I see something that thinks unlikely. And I almost always try to say, it almost never works but sometimes it does. Or like it mostly ends this way instead of saying, that will fail and it will end this way. I've seen this so many times where I think in my head like two black and white of like if A then B, you know, if someone has this idea, it cannot work or this can not happen . And you have to train yourself to always think in like