The most simplified breakdown of the SpaceX IPO on the internet

0:00 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 the two guys in a truck version of this? What did you say? Two idiots and an S one.

0:17 I feel like I can rule the world, I know I can be what I want to I'm putting my all in it like my day song on the road less travel never. So this is for you know the there's gonna be people who are Smarter, wealthier. More technical than us that are explaining SpaceX, but We promise to be

0:34 The most relatable analysis you're gonna get. Uh, 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, 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

1:02 Interesting quirky People aren't talking about this, but check this out. styled nuggets. So that's what we're gonna try to do. In the next hour or so. I'll just play the character.

1:12 It's all acting, but what would you say SpaceX does? Okay, so SpaceX, what do they do? SpaceX builds Rockets. Uh, 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 take stuff stuff into 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 the

1:39 You know, way, way back. That was the original mission, still, you know, a part of the mission. And I guess the the origin of that was that they uh you know, 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, excited about when NA was gonna go to Mars. Oh, I wonder where the where the Mars mission is at for NASA.

2:04 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've we've nothing planned to go past that. Like he's planning a vacation. He's like, uh hey, so like I have some free time. Let's see if we can like take the kids to Florida and like watch uh like 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

2:33 To take I think it was like a plant. Like a little succulent or something. into into space and it'll you know, let's take life to Mars. Life technically speaking,'cause 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

2:54 I CBM missile basically, and uh they laugh at him, they sort of spit in his face. He realizes like, oh shit, after two trips to Russia. This ain't gonna work. And Like any good entrepreneur does. Doesn't take no for an answer.

3:09 Like any stubborn genius does. He decides to be a little bit more. 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'em in Missouri. Elon and I are basically the same thing. Same time. Just if he is You know, his

3:30 Two hundred million times richer and two hundred IQ points higher, but very similar. But I relate. If you have SpaceX

3:44 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 entirely know how it all contributes to the same thing. But I do know that the main Reason why he started was that uh reusable rockets is the best way to make going to space to happen because you can

4:07 Make things cheaper. So they Yes, that's correct. So they have let's say You know. three core components here.

4:17 Or I should say. Yeah. So they have launches, they have Starlink. They have X, the artist formerly known as Twitter, and then they have X AI. And those four

4:31 Are the four components of what SpaceX currently does with some new things coming online, like they have something called the Terra Fab. Where he's building like the largest chip factory in the world. Um so that's like you know, What are the chips what are the chips gonna be used for? Their own rockets? His a their own AI. So

4:49 Basically, He's got X AI, which is his AI company. And um Terapab is basically his way of getting ahead of what he believes is like The chip bottleneck in the world, which is

5:01 There needs to be more chip production. Ideally in the United States. So again, if the if the current m manufacturers of chips are are already booked out si 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 and 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.

5:27 And she was sad. She was like, I wanna 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 size 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 this company. You know? It's all these th he just made a superbad. Except he kinda put like one of the You know, like um what's the little f what's the little foot rest thing called? That's like Twitter. He's like, Yeah, y it'll just be here at the bottom. Yeah. Because the the only downside when you look at the analysis of this thing is that you know, Twitter revenue is like half of what it was when he bought it. So that one hasn't really worked out. But he 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 uh since then.

6:09 So super company. Let's hear it. Super company. 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 It's very polarizing because you have On one side, people who are

6:26 Mm. rational, logical creatures who look at this and say, Wow, so it's a hundred times revenue? Like that's Pretty insane. Uh what are we buying here exactly? And on the other side you have

6:39 The cult of Elon and you have people who are bullish on the future of technology. who just believe that like Anyone we trust. And it's not about the price to earnings ratios. It's not about

6:50 Uh price to sales. It's about you know, the price to Elon ratio. And if it's an Elon company, you're gonna have ten times the price you would probably otherwise have in a company. And 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 and maybe come to our own conclusions? So just to put this in context, the word trillion has been thrown around a lot. You know, anthropic is about to go public or something like that. You know, it's worth around a trillion or nine hundred billion.

7:22 Same with open AI. The word this word trillion is being thrown around a lot. And I wanna put this into context'cause 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 a seconds.

7:38 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 a hundred million seconds. A trillion.

7:54 Is Thirty Two thousand. Years. Yeah.

8:01 Isn't that incredible? It it's hard to fathom how large a trillion is. That's what I'm saying. And and when this idea happens, Elon will be the f world's first trillionaire on paper, at least. And we're talking two trillion uh two trillion, right? So that's uh 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

8:38 Relatable. interesting, profitable uh 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

9:01 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 um 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.

9:34 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 s traditionally quite difficult to get. And this Starlink 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.

9:57 It makes like eleven billion dollars a year. And revenue, it's like forty percent EBITD 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

10:16 Everybody on earth, you know, essentially needs is the internet. Uh and they specifically solve the problem in in rural areas. So Starlink is is very, very interesting as like that's the cash cow of this business. Which is new. I it's 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

10:35 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 um you ever seen that episode of Entourage where Ari Ari Gold walks into the office with a paint Table gun. And just starts blasting people that he's laying off. That's basically what they did to the Starlink project. They went there.

10:56 And they just were like, What the hell is going on? Nuked everybody, restarted from scratch. And then you know, it now is like one of the the greatest sort of uh businesses in the world right now. It's just the Starlink business unit inside of inside of SpaceX. Okay, so that's e that's easy to understand. That's that's pretty straightforward. That's easy to understand. And then they and then 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 who will be subscribers to this, maybe like

11:23 Another thirty, forty, fifty million 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 gonna be worth. Then they have this other thing called direct d direct sell.

11:47 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 a my call dropped, I hit a hot I had a dead zone. Yeah. Right. Maybe you're driving on a bridge, or maybe you're just like, Oh yeah, this one area on my route to work always has like shitty service. No They basically can now do

12:06 Um Starlink from the satellite direct to your cell phone. So you don't need the little satellite dish like you need for the s the home internet service. You don't even need that. It just goes straight to your phone. So they they partner with T Mobile, for example. And so in areas where you have crappy reception.

12:21 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 launch their own T Mobile. Right, they launched their own Starlink, just that's what you use for your cell phone plan. Or it's this little add on.

12:36 To every cell phone plan on earth where it's like, Oh yeah, and for an extra three 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 th there are, you know, the the market for, you know s internet services across cell phones and home internet is like

12:57 Two trillion dollars or something. And they actually have and and by the way. There's no differentiation really between any of these. If you go to T Mobile or ATT or whatever, they're all Verizon. They're all essentially the same. Which commercial do you like best? Exactly. Yeah, it's all the same thing. Who like what you know, is Patrick Mahomes like your favorite player or you hate him? That's gonna decide who you go with. And so

13:20 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, um, you know, it can be lower cost because of the way they're doing it in in uh in space. They don't have to do ground build outs of towers. So that's kinda like the 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.

13:45 Down by fifty or a hundred X what it was pre-SpaceX. 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 the 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 gonna be half of what it currently is.

14:03 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 kinda the 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.

14:21 And you're like, you know, when you hear this, you think I don't know what you think. I what the hell. You know, you think about like literally a building floating in space. Yeah, it's hard to fathom. I think like we're colo colonizing the moon or Mars or something like that. But I also think like Is there not enough room here? Like it's it's sort of It's it's unfathomable. So that that's hard to understand. The answer is we got plenty of room.

14:44 It's hard. It w 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

14:59 the heaviest rocket ever and take 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 uh data center backlash. That the people who even have the money

15:18 And the Engineering chops. And the power and the the reserved equipment to be able to build. They can't build. Uh in in the United States, which is kind of insane. Well, what's you know what's really uh so think about this. So uh

15:32 I'm a history nerd. So one of the reasons, one of many reasons why the American Revolution happened was when uh American colony colony uh 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. You're supposed we're supposed to like 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 gonna 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.

16:18 space when everyone's doing their own thing, what's gonna happen in fifty or a 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 sp area of space or Mars or Moon. Well, the moon, I think definitely, right?'Cause it's actually like a limited land area versus um Space which is

16:48 Yeah. 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 the best route and like, you know, we we can only have so much like debris in this 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 and uh

17:19 Hard to get permitting to build on gr on land. So It's it's such a like I'm gonna take my ball and go home, or just like the you know, men will do anything to avoid therapy type of Conclusion which is starting to space. Like I I w I want so little to do with politics that I'll glad I'd rather

17:39 Build this in space and figure out I'd deal with the engineering. So The big risk of this company right now is two two questions. The first is Are they gonna be able to build something called Starship? It's like they're Big ass rocket. Bigger way bigger than the Falcon Nine.

17:54 And so i I think it carries like seven to ten times more payload. Than the Falcon Nine. And so if you know, Falcon Nine's bringing up what of let's call it ten satellites at a time, this thing will bring up seventy satellites at a time. And so

18:08 They haven't yet been able to get starship to work. Uh 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 like feet of engineering.

18:21 In human history. But there's a question of if So just a one some people might not believe that they'll ever get Starship to work. That tends to be a foolish bet. 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.

18:37 And so One question is is Starship ever gonna 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. Uh ten thousand launches. And the the guy was like, So wait, so that means like You're launching like multiple times a day, obviously, right? Like you're launching thirty launches. And he's like

18:59 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 airport. 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 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 an airplane lands.

19:28 They clean out the the the tr you know, get your crumbs off the off the seat. And then they go and then you know, 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 starships thing ever gonna happen? And then if so, there's another set of doubt or risk or uncertainty. Which is

19:48 Can you even do data centers in space? Is this even gonna work? Uh, and there's people who argue that you know, uh the 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 so tur turning those like photons, basically, or electrons.

20:09 Into Tokens for AI. Like that's kind of like the pipeline. That's kind of the world uh where the world is going is Uh we are gonna need An insane amount of AI tokens, whether that's

20:22 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 gonna 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,

20:42 It's powered by the sun. You don't need any cooling. Because sp uh space has like you know pa space is basically freezing cold and has like a radiative whatever cooling mechanism where

20:53 As the chips get hot from being used, uh there's like a a natural physical mechan mechanism to cool them down. Some people argue against that, but Elon believes that it's no problem. And that basically streaming AI tokens from space is gonna be far cheaper and more effective than any land build out of data centers and then figuring out how to how to transmit those. And The physics the paper the paper papers the question is can they build it? And

21:19 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.

21:28 Then the only question is, can I make it? And the answer for him has always been yes. And so that's kinda where we're at with this business. This string of letters we're putting together to make words into sentences is Like the words that are coming out of your mouth right now are are wild to me.

21:44 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 gonna go to space to create AI to like Imagine explaining this to someone. I there's this old man that I hang out with in my building who's ninety six years old and every time I uh every once in a while I go down to his room and uh he tells me like where he was when JFK died and he'll tell me cool stories. Just imagine like explaining this to him. It's like well It's just crazy how fast humans progress. Your how old's your daughter? She's two? Yeah.

22:20 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 you know they're like yeah, so wait a minute. So this is happening right now somewhere else? I'm like, Yeah, there's a guy with a camera.

22:35 How do the camera work? Couldn't really tell ya. Uh, 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? There's like satellite and like there's Wi-Fi. Mm. That's a tough one too for me. Uh Bluetooth.

22:51 Kinda like Wi Fi, but something I'd something's different there for sure. And it's showing up on our TV and where's the remote? I've had to experience my uh 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 him questions Like do they ever just say like Yeah f yeah. You know what I mean? Like uh

23:17 No, no. There are so many things that uh boggle my mind about, you know, today's technology. So I I'm with you that like this sounds mind boggling too much. But also that someone is audacious enough to keep pushing. Like keep put what okay, we did that. What about this? What about this? What about this? Right. And to have that open mind, it's uh 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.

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24:14 Check out hubspot.com, the agentic customer platform for growing businesses. What about Twitter and X AI? Okay, so That's kind of insane to me. The fact that a s rocket company owns Twitter.

24:28 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? And I think it was sold for two hundred and 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 de 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.

24:53 So Ex advertising is at one point eight billion now. It's down a 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.

25:04 He added subscriptions and payments, whatever, so that's now a billion dollars in ARR. So the total You know, is two point eight billion. And it was four point five when he bought it. So

25:16 stuff has you know, has 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 you know, w WhatsApp or Instagram or TikTok or any of these other apps. But what it does have is data.

25:32 And maybe I can use that data to power Brock. And then he tried Grok. Now Grok is falling behind Anthropic and Chad GPT. So he said but but he again You know. The I think the one of the great hallmarks of entrepreneurship is basically a failing forward.

25:48 And so maybe in the same way that X sort of failed forward into like oh well it gave Groc some differentiation, but then Groc hasn't quite kept up with everything else. He used His

25:59 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.

26:09 Colossus. And He's really good at building the machine that builds the machine. So he's he's basically the what he's the best at is building. factories at this point. And so, you know, Tesla

26:22 has its own factories and and produces, you know, an enormous amount of cars, um, faster than anyone else. Designs and builds. Uh, he's doing it now with the Terra Fab. He does it with the Rockets. He did it with with data centers here. So he built the largest Cluster of GPUs.

26:38 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 and uh what does Twitter have? I think you say five hundred million? That's shockingly um Five hundred million is still, uh this is amazing, a niche.

26:57 Social media network. Yeah, and Groc has a hundred you know, a hundred million users, whereas Chat GPD has a billion, so ten times smaller. And so he doesn't have the use of it. So what did he do? He just

27:10 turned into a 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.

27:24 A billion dollars a month to twelve billion a year to use his data center? And that's Google. Google themselves was the best at building data centers. And they need to to rent from Colossus. And then same thing with anthropic. Where Anthropic is paying you. Uh over a billion dollars also a month.

27:40 to rent out. Now these are short term agreements. They can cancel with like ninety days notice. So who knows, five years from now it might just be a temporary stopgap 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 S one out, I think four or six I forget when one or two months ago.

28:01 And I think it was last week or maybe a Monday. It was almost like a quiet amending of the document that says, Hey, uh Google just signed up. to spend a million dollars, a billion dollars a month with us to become a customer. And that that's insane. That's such a huge number. By the way, I I have to think the h the nine D chess move there was that they knew and they staggered the

28:23 They sort of staggered the announcement. May maybe it was truly uh Uh oops, forgot to mention this, but I think uh It would have been smart if they intentionally did that too. Yeah, it was cool. Um Do you wanna see any of these slides, by the way? Can I just sh can I just run you through these and you're did you have a uh sit down with your wife and you're like okay.

28:40 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 Munker trying to understand the business. And it's like, okay, Charlie Munger would ask, like, Is it in my circle of confidence? How do I lose money here? Show me the incentives. What's the mode? Prices. Price is what you pay, the value's what you get. And so it started to basically

29:01 Break it down. Starlink 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 tax, you're buying three different companies that are stapled together. You have the space launch business, the connect the internet connectivity business, and the AI business. And then it Yeah, here's the high level numbers. So eighteen billion in revenue.

29:18 Losing two and a half billion, uh, six point six of adjusted EBITDA. Yeah. I'm gonna bring that up in a second. Yeah, I think that's a that's that's Wack. They burned eight billion of cash last year.

29:28 Uh, this is the Starlink business, so it grew from two two two million subscribers to ten million subscribers, but you can see like it is starting to slow down. So that's like one One cause for concern was that Key w you know Q one this year was was Not not high growth.

29:42 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.

29:57 Let's see. Everything is dependent on Starship, which is not A guarantee. And that's the big the big question. And then

30:05 Oh, they also bought Cursor. So they bought cursor for sixty billion or b have an 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 by merging. You know, cursor needed to figure out a way to have compute and you know Their own models.

30:23 And a way to survive against codecs and cloud code. And so like, you know, it's the sort of game theory where where the the the bottom players like in survivor will form an alliance in order to like To to flip the game on its head, basically. Let's see if there's anything else here.

30:38 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.

30:57 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, I have some other things about his comp package is pretty crazy. We we can go there. But uh Anyways, AI says Charlie Mugger would put it in the too hard pile. It's a wonderful business at a silly price.

31:15 is the uh AI Charlie Munger conclusion. And um It's a great business, you can admire it from afar. You didn't need to own it was the was the conclusion that he had. It's just N logic doesn't particularly matter. I don't think like I I don't think that you can use like a traditional way of looking at this.

31:33 An Elon asset is not a normal company. So it's it's really it's hard. It's hard to price this. It's it's almost like this weird thing where it I always thought it was interesting. Whenever you're like going through an MA process, someone will say, like, I'll give uh 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

31:56 Years of payment. Up paid up front. And when you look at this You know, the the 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 f 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?

32:18 Or not. I think uh the the crazy thing about this and then and even when somebody why would somebody pay fifteen years And 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. Might only be four. Might be a growth rate is dependent on like you're you're making the Elon bet, which is can he figure it out? But I'm like I don't even know if he exists by the time that like this like the the you get the sum of your future cash flows on this one. Well here's what you need to believe. You'd need to believe that

32:48 The Starlink business alone. Which is at eleven billion in revenue. is probably gonna grow to thirty, forty, fifty billion in revenue. Um over the next let's call it five years. You need to believe that starship works.

33:01 And that they can take, you know, so they can scale both Starlink as well as the the data center. So you need to believe that Starship works, you need to believe that. Data centers in space. Are gonna be a thing. And um And with that, you'd have to also I w 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 You know, Saudi Arabia made trillions of dollars

33:25 Because they own the oil. They were the 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 gonna run.

33:39 On compute. Every single business, every single consumer Every single robo, every single car. Every single appliance is gonna have A compute need.

33:50 And so then there's a question of who's the Saudi Arabia And what you would be thinking with If he goes to s if he's the one who could put data centers in space, and data centers in space are gonna be Giving AI tokens at a maybe

34:05 Whether it's fifty percent or two hundred percent lower cost. Then ground based compute for inference. Then he's Saudi Arabia. In space. And he's the only one positioned to do that currently.

34:16 So they have a um uh a line item or um um a section of the us one that talks about future business lines And he actually says that uh mining Asteroids. is um and and potentially mining Mars and mining m the moon.

34:31 for energy. And I um I guess that potentially means some type of oil or something like that. And so yeah, actually they actually have that cut covered as well. Yeah. Of course. Naturally. Mineral mining. So 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 stars.

35:00 And then it goes on to say that uh 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?

35:17 Let's just put those side by side. But like the the 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.

35:47 Um so that's kind of incredible. Also I've met 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

35:59 You know, I actually want my Yeah, my heart surgeon or my brain surgeon to have a bit of a God complex, a bit of a savi 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 for just to be like, Hey, you're already the richest man on earth. You wanna sleep on the factory floor? You wanna you wanna go ahead and build these and put it all on the line again? It takes something that is irrational.

36:21 To make man wanna do that. And that could be noble? Or you could read into it like Kind of a

36:28 Insecurity personality defect. No, that's not how what I'm getting at. I I I I wouldn't say that I'm the huge like Elon fanboy, but I think this mission's awesome. No, I think it's great. I'm I 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 easier to inspire your employees. There's the famous story of like someone talking to uh the janitor who worked at NASA in nineteen sixty eight, the year before we went 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 awesome. I I think the Wall Street Journal had a uh 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.

37:07 So look at uh I don't know if you saw this, but SpaceX IPO is expected to create over four thousand new millionaires, including some cafeteria workers who compens whose compensation packages Included employee stock options. And then This

37:20 Me and the SpaceX lunch lady. Dude, that's so crazy. Yeah, I think it's great. Like the amount of wealth that's gonna be created, I actually wonder I don't know enough about uh economics, but like with all these new rich people being created with anthropic chat GT and s uh 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.

37:44 But it was like pre The IPO chatter. And um 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.

37:59 Without his wife And made an all cash offer on the house. at like what they were gonna list it at and um That was it. It was done. He literally never came back even.

38:09 And bought the house. There's I've never seen anything like it. It's just crazy. I I I wonder what's gonna obviously the coastal cities are gonna like, you know, things are gonna change, but I wonder um what it means for the rest of the country. What's this say? So pour 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 losers 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, his'cause he was one of the earliest investors in Anthropic. He had Robin Hood, which would be about five billion.

38:41 He had cursor. He was one of the I think he was literally the first investor, maybe, uh in the first round at least. And that's a that would be, you know, a three billion plus stake. He's got SpaceX fifteen billion, Solana five billion. And his overall portfolio out of uh, you know. What he w his slush fund that he was.

38:57 Inappropriately using illegally using customer funds to go invest. It'd be a hundred and fourteen billion dollars today. He'd be seen as one of the greatest investors of all time. Who gets those? Who gets the shares? So they liquidated all these when they did the bankruptcy. So nobody won, actually. Uh the people who bought out of the bankruptcy estate, uh it's kinda like when Tim Draper bought all that bitcoin at a low price from the US government when they seized the Silk Road Bitcoin.

39:23 Um yeah, it's whoever bought the b the bankruptcy um the assets out of uh when they did the liquidation. That's who won. Um that's insane. One one thing that I want to call out. And I don't have a good explanation for this.

39:37 But they talked about in the uh S one about having like okay, so the way it works is you see this you see EBITDA, which is uh earnings before interesting taxes, depreciation, amortization. Then they do this thing called adjusted EBITDA. Which in my opinion makes no sense. I guess you there's a lot of reasons as to why they do it, but the best way that I could explain it is

39:58 You know, every month my wife and I we sit down and we look at our budget. And the we 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 f f future expenses and let us know that we're uh keeping to our financial plan. Every once in a while, or uh r rather, in the first six months of us doing this, we kept saying to ourselves, Well, we took this vacation, but like we took our parents on vacation. It was to celebrate this thing and then In month six of doing this for 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.

40:32 vacations, buying a car. So we just gotta up the budget and that's what we're gonna 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 gonna have this one time depreciation. I I think that's what it said. Plus earnings before interest and depreciation. I don't understand why you would add It doesn't make sense to me. Does that s seem weird to you?

40:58 No, I I mean I think spot on. I I think Buffett and Munger famously hated Ebina as a as a thing. I think they just called it bullshit earnings. It's like our and our b it's like our earnings are this and then our bullshit 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 for uh 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, you know, we adjust back in for stock base compensation. It's like Well, that's how you pay the people to do the work. So why are you keep why do you keep adding that back in? Is that going away anytime soon? Not really.

41:35 For example, it might be the go public costs. Sure. That's an adjustment. Uh but you know the adjustments tend to be Far more favorable than that. I think there was uh a a few other funny things. Well th do you know they o I think they own like two billion dollars worth of bitcoin and I think some of the adjustments was that bitcoin price has gone down.

41:53 Did you see that? That's what I need, dude. I need my adjusted net worth. It's just adjusted for my stupid ass investments. Yeah. And then they uh another funny thing was they did a project where they paid a vendor in shares. And the strike price of the chairs was like four twenty. I think it was like forty two dollars. Point. twenty cents or something like that. And then I think that when they did like a four oh nine A valuation for Twitter, it was like

42:21 I'm I'm screwing up the exact numbers, but I think if it was forty two billion dollars or they made it like forty two billion dollars like four twenty. And like if you do like a control F four twenty. It's all it's everywhere. And that's kinda Insane. It's the most try hard.

42:34 part of Elon. I I I I despise his four twenty. Uh Is there a hitchhiker's I've never read Hitchhiker's Guide to Galaxy. Is there like a four twenty is this like a a weed four twenty reference or is this like four twenty thing, yeah. I'm cool too, right? I mean, I think it's four. I think in Hitchhiter's Guide it's like forty two. That's the number for the universe, but that's not I think why he's doing four twenty. Okay. Well Yeah, I wasn't sure, but that's pretty silly. What's this?

43:04 Shout out to the Ontario's Ontario Canada Teachers Pension Fund. Which in twenty nineteen decided You know what? We're gonna slang an investment into SpaceX.

43:14 Back before SpaceX was pretty obvious, and they're gonna make twelve billion dollars this year. Um, and the in the in the IPO, which you know more than funds their pension. It's you know, thirty three thousand dollars per teacher that's in the in the fund, uh 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. Um But like whoops.

43:41 Yeah, that's pretty hypocritical. Did you put a a appendix on your slideshow with just funny tweets?'Cause that would be wonderful. Yeah. This was manual. Because Claude don't have that sense of humor that I have, so I had to do this work myself. Nuggets that I thought were interesting. Yeah.

43:59 Did you see who else is on the cap table? N no, uh not really. So I'm always interested with these IPOs, like who you know. I don't know. This episode is this part of the episode is brought to you by Pocket Watchers. Um I wanna know who else is getting rich out of this.

44:14 Dude, when I was watching the Knicks game the other day, I kept pausing. I'm like zooming in, like, who's that? Courtside? Who's that person? I'm begging for this court side app. I just want somebody to take a picture of the entire court side seats and tell me who everyone is, what they do, and how they made their money. And I'd like that for every single game. And like the game the schleppier the guy, the more I wanna know. Because I would zoom in like Yeah, this guy Shallomy, 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 all that's all I want to know is who's the shleppyest looking person. Not even the New York ones. When they're playing in San Antonio or Oklahoma City. I'm just like Oh what is that?

44:53 You know, he collects all the used chicken wing bones from restaurants all around the country and turns it into bone broth. Like ah, that's what this guy does. 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 a beer belly and he's just sitting there and he looks like he's like laughing hilariously. And uh they put the camera on Drake and everyone's cheering, and the guy looks over to Drake and he goes, Are you famous or something? And Drake was like, Yeah, I'm kinda famous. And then like the the the 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, w that's one of the only cool things you can say to a celebrity.

45:45 Like I've actually played the scenario out in my mind many times of like how do you if you see if you actually see someone really famous, like If you avoid it, lame, no story. You go up to him and you ask for a picture, no, no way. Just you know, you walk you walk away with a picture and no dignity. You you annoyed them. Like what do you go Tell'em you're a big fan. What do you actually do?

46:05 I think you know what you just said, which is like, Are you famous or something? Is great'cause then they have to be like, Yeah, I'm I'm Drake. I'm a then y they just have a blank face, like, I'm a rapper. They're like, Okay. And then like I I and then you have to start justifying yourself. Like that would be great. Just 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 I was out to eat w uh like on the street. Like we were s at a sidewalk table and he was just standing there, it looked like he was waiting for his wife or something. And I walk over and 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 and I I just learned we I hung out with him for twenty minutes. Like, Yeah, I just moved here. I'm still 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,

46:50 W are you famous? Wha wha wh what are you doing? He goes Yeah, I I just um I I play for the Knicks. My name's Landry and he told me his last name. What's his last name? Is it Sam? What is it? Sham it. Dude, I totally had the opening. Like his wife came over, my wife was talking to his wife. It we totally had the opening where I could have like exchanged like noticed he's six five.

47:10 I uh no, I didn't uh everyone in New York is like good looking like and and striking looking. I just thought he was a dude. And uh The original Jesus like does he look like Jesus? I don't know, man. He didn't do it. He didn't look like that. No. I'm surprised you didn't tell him like sorry everyone's staring. I have a podcast. No, we 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 do you want to do it? We should intertwine and you left it that way for a bit. And uh and I I thought he was like a walk on. I thought he was just like a you know, like he uh the lucky guy. And then I see him last night and I'm like

48:01 My entry. What's good, Doc. I had 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

48:14 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'em really well and they just dap it up and they move on with their day. And uh I've seen'em do this now four or five times and I I have to say this 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 t him at this pizza place and I was like I don't really want to like Approach'em, but like

48:46 It's kinda the greatest guy ever. So I let my daughter wal I saw which way he was walking and I was like, Naomi, walk that way. And she walked and like intercepted it and like intercept 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.

49:03 Yeah, use your child as bait. Naturally. Back to who's who's famous on this list. I'm gonna read you a name, I don't want to tell me if you even know who this person is. Anton Antonio Gracias. U he's like his buddy who like started a hedge fund. Yeah. So the second biggest shareholder of SpaceX is Antonio, who's owns about seven percent of the company. He's the only one over the five percent threshold as an individual, I think.

49:34 And it's through you know, he has this thing called valor. And basically Antonio he'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.

49:49 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.

50:06 He would just bring Antonio in to like, yo, 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. He uh there's a story about how and when uh when Tessa was like on the brink, he loaned Elon, like

50:25 I don't know, a million dollars or something like that. Personally, not for any equity, just like uh You need it. Here you go. And so He's gonna make like ninety billion dollars in this. Which is incredible. There's also a guy one time when I hosted a HustleCon dinner

50:41 At your office, there's this guy named Steve. Who came? All right, big news. We just hit three hundred thousand subscribers on Spotify. Thank you to everybody who subscribed. If you're not Go there and watch the episodes on Spotify. It's the best place to watch a podcast. And back then I knew Steve via my friend Neville.

51:00 He owns this thing called or start helped start this thing called Gigafon. Have you heard of Gigafon? Mm-hmm. It's a Uh it's a fun, but sorry by two guys. Steve, who is the I'm acquaintance of we are we are Luke is the other. So Luke is the p one of the PayPal founders, I believe, or uh Founding team members.

51:18 And uh 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 Gigaphon and it was just Find Elon. And and this is me talking, not them, but they would say like we're just gonna raise money and invest in Elon. And I believe they are 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.

51:42 Because even though you hosted events in my office, I didn't really get the invite all the time to go attend them. Uh That's not true. I was working. I was working. Um I want to read you an email. I have open right now a email. from somebody who used to be at Founders Fund.

52:01 And Giga Fund spun out of Founders Fund. Luke was at Founders Fund and then he he left to start Giga Fund. So um The email basically says, you know, one of the smartest and and bravest things I ever saw someone do. was when Luke was at Founders 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.

52:27 Take all the money and put it into the Elon companies? And at the time that seemed like You know. Kind of crazy. 'Cause Elon was doing pretty crazy companies.

52:37 And in addition, it also seemed not sophisticated, which I think is the underrated part of this and the actually the part that's more interesting to me. Like if you if you look back Like the last fifteen 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.

52:55 You didn't need to do anything. Like it we all want to do advanced, complicated Um smart, sophisticated sounding things. But in reality if you just pick the right you know pick the right horse and in some some cases like what I'm talking about with Google and Facebook and Amazon. These were obvious horses. These are not like

53:13 It was not a surprise to anyone in twenty ten. That those rare. gonna be important companies over the next fifteen years. And you just had to not do other shit.

53:22 Um 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. Chamoth s after Facebook, you know, started his own fund and then started doing spacks and bought the Warriors and She's done this and that and this and that and this and that. All he had to do was just hold his Facebook stock from when he was an employee, he would have done better than everything he's done since then.

53:46 So we we seek out sophistication, we seek out activity. Uh, but it but simplicity is actually, you know, the um a 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 what everybody was thinking. And I think like a chain email like like he to announce that he was leaving and he sent it to like his buddies?

54:05 No, no, no. This is somebody who was at Founders Fund just emailing me telling me about this. And um And so and I've I've it always kinda stuck with me. And now when I'm looking at this filing and you see GigaFund. And Luke Luke no second. Oh, they're listed. So they have a huge stake. They have a huge stake. Got it. I wasn't I was never sure how big it actually got, but I remember Steve

54:24 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. That that's it? That's all he does?

54:35 Yeah, I I remember the same I had the same emotion. I'm like, but why would he Th there's gotta be more to it. And I think you can do that, but 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. Uh Steve Jervison is who I thought you were gonna say. Do you know Steve Jervison? Yeah, I do. He started D F J like a fun, now he's got his own fun, future ventures. I've met him once, really surpr like just a not really nice guy. Like silly

55:02 future future a true futurist. And if you go I think a a fun, interesting read is Go Google if if you're a true business nerd, go Google Steve Jervison and go look at his Flicker. That's right. Flickr, like the old photo sharing website. For some reason he He 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.

55:24 Um, 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, post on Flickr, and write like a mini cap a caption that was essentially a blog post. But why he's really excited about a certain technology. I've actually learned a lot just by going and reading Steve's Flicker. Um, I think it's 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.

55:52 Never sold a single share. Which is the other remarkable thing is to hold uh through all the the ups. His his wife, Genevieve. Was my boss. At my first job ever.

56:04 And so I knew Je V very well. She's cool, yeah. Yeah, and she uh and I'm friends with her on Facebook. And so like I've seen like this whole thing and like I you know, I see all these like cool photos of what they're doing and It's like uh 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 I you know, I think there uh one of the reasons On this podcast I try to be more optimistic and uh benefit of the dowdy with

56:33 I don't know, technology and future 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 optimists get to be rich.

56:46 If you hang out in Silicon Valley long enough, you realize that pessimism is a losing strategy. Um when you're around Innovation and technology. It pays to be an optimist. That's the first thing. The second thing is um I had a friend recently who

56:59 Uh, you know, had a family member who was dealing with like health issues. And had had that like, you know, health issues for decades. And this kind of like it was resolved, like I have to live with this. And then on our podcast, we know we've talked about that guy from uh GitLab who like is curing his own cancer using AI. And um you know, that sounds like futuristic, but like he actually Yeah.

57:18 Did it. It's not like a not like a theoretical thing. Like the yeah, at least at least one person did it. Um And so he went back home uh recently and w you know, 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 can do this. And what I told them, I was like, you know, it's not That oh, they're different types of people. They resist it and we don't. It's

57:41 We are in the bubble. What 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 AI, guess what? You're gonna approach Someone you know, a loved one with cancer, uh, 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

58:05 Ambitious, interesting. innovative people is that You get that normalization of what's not normal. You get to hear you get you you get your frame broken enough. Where you will in your own situations of life approach it slightly differently. And you know,'cause 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

58:26 Damn, this dude literally called his shot twenty years ago. Learn you know, self taught learned how to you know. build rockets and recruit this team. It did what was you know pretty much impossible. And then today is the you know the biggest tech IPO in history. You you have to, you know, respect that and also like

58:43 Forget about how good it is for them. But like Let it break your frame a little bit. So that in your life When an opportunity strike or an idea comes, you don't count yourself out. You don't You don't miss that opportunity. You don't you don't ignore what's in front of you and you actually take action.

58:58 One of my biggest takeaways of living in 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.

59:12 And then I s then I started changing this to where I see something I think's unlikely. I and I I almost always try to say It almost never works, but sometimes it does. Or like, you know, it it mostly ends this way. Instead of saying

59:27 That will fail and it will end this way. I've seen this so many times where I think in my head like Uh of like If A, then B, you know, if someone has this idea, it cannot work or this cannot happen.

59:40 And and you have to train yourself to always think in like um Not absolutes, but like the the odds are this, but those are still like odds that like if enough people try, it could work. Well speaking of the impossible Uh one thing I wanted to bring up was the uh his pay package. I didn't know this until I was digging in. So I I thought it was kind of new new learning. Um so you remember at Tesla when he had that like crazy

1:00:04 You wanna have that crazy pay package idea. And he was like, Yeah, like if we If we become, you know, the world's most valuable car company by far, if we get to like, you know, five hundred billion in value and we're delivering this many cars and we do this and we do this. Then I get this like huge pay package. And if I don't I get

1:00:22 Nothing. I've got it. And it's like laughable when they sign it. They're like, Yeah, dude, whatever. You do that, and then it happens and people will freak out over it. Exactly. There's a compilation of people of mocking it. Laughing, being like this is ridiculous, never gonna happen, blah blah blah. So ludicrous. But you know, whatever.

1:00:40 And then it happens and he gets the money and then a dude with eight shares sues him in Delaware. Yeah. And says, No, you know, that wasn't that wasn't he shouldn't that shouldn't have been approved. That's too generous. And it's like, dude, it was seen as impossible before. And he got stripped of the pay package and then blah blah blah. He got ended up getting Re revoted and reinstated, but the plaintiff was like uh uh That that was basically the argument. It's insane.

1:01:05 Have you seen what his pay package is here? He has like The same one. Um, okay, so let me just read this to you. So the very first one is called The Mars Award. So Elon gets

1:01:18 One billion shares. In SpaceX. How much what what b how many points is that? So it's going public at one hundred and thirty five. uh dollars. So that'd be a hundred and thirty five billion at today's value.

1:01:30 But obviously if he did all this stuff, it'd be worth a lot more than today's value. It would be pr the the the total grants uh are like seven hundred and fifty billion dollars. That's his like hypothetical comp if he hit if he hits all these things. But now listen to what he's gonna hit. Two things are required. One, the market cap has to grow to seven and a half trillion, which would be the most valuable company ever. And two, A permanent self sustaining colony on Mars of at least one million people. Both have to happen for him to get paid. That's the Mars award.

1:01:59 That's crazy. A million people living on Mars. The other one is the AI CEO Award. So this is Three hundred million shares, so a third of that.

1:02:11 This is kinda like the uh like the consolation prize, you know what I mean? Like this is like a little ice cream he gets as a treat. Which is The company goes to six point five trillion in value. And He's delivering a hundred terawatts of compute per year.

1:02:27 from non earth data centers. So he does the space data center thing. And dr delivers a hundred terawatts of of compute per year. Now you might be wondering, a hundred terawatts, I don't really know how to put that in perspective. Guess how much? So he's trying to the he gets it if he does a hundred.

1:02:41 I guess how much the total kinda current US Uh terrible. Production is. I don't even know what a terawatt is. So so we're talking like a unit you said seven hundred and fifty, is that what you said? Uh he wants he if if he does a hundred, he gets the awards. So what is that relative to all of the US So he gets money at a hundred. What's the current US at? I don't know.

1:03:01 Take a guess. Fifty. So that would be like if he doubled the the US total electric grid, that'd be pretty crazy, right? It's currently one terawatt. So we'd have to one hundred X the entire US grid.

1:03:13 Just to get this. In space. In from space data centers. Yes. From something that doesn't even exist and people don't even believe is possible. So yeah. Ha, balls.

1:03:26 Yeah. Set big goals, I guess. It's uh it's hard to do. His base salary on the on the way is zero. I mean, he owns obviously a huge percentage of the company anyways, but like this is the additional grant he gets for continuing to work in the company. This is crazy, man. I it goes back to the factor like the biggest thrust is that he dies.

1:03:46 That's the biggest risk is that he dies. The biggest risk is that he dies. Like The biggest risk is that he doesn't ha like If I'm a shareholder, I'm like

1:03:54 You have you must have a dietitian. You must have a sleep coach. Like that's what we're talking here. Or is it like a John Jones situation where That creates the fighter. You know what I mean? And if you if you put'em on that

1:04:09 You know, sleep at eight PM schedule, he's not John Jones anymore. Dude, I talked to um a person who trains professional athletes and he was like, It's so funny. I used to train these baseball players and the ones that were the most eager and did exactly what I said and came to me all the time and said, Give me more, I want more, I want to do this. They almost always were never as good as the guys who were like eating Ms. Or doing skid like eating sk eating poorly and like going to bed at late'cause they played video games all night and they just show up. And like he was like one guy made like a game winning uh shot. And afterwards I was like so excited, I ran up and high five him and he's like, What are you, man? He's like, You did the shot. He's like

1:04:45 Oh, whatever, dude. Who cares? He like kept while he's like the guys who cared, you know, treat him mean, keep'keen. The guys who cared the least amount and like tried, not exactly tried, but like put brain space on like the effort or the best. And that maybe that's what's happening here. You know, the the the weirder that things are, the better that he's gonna perform. Yeah, which is which is but I mean how crazy is it that when we hear this stuff it's like Oh like can he make Starship work? Can he make a orb or data center work? It's like we think the higher risk is just that he dies. It's like in the probabilities game, we're like, I don't know, the bigger risk seems like that. It just it's uh You've learned so many times in a row that you it's it's not wise to bet against. So I I don't think that like I'm a dumb idiot and I we should preface this before this episode. Don't listen to anything.

1:05:32 But the one thing that is true is that he's a challenging person to bet against. And so all these science fiction y things. I I I I think that he's bad at timelines, but I think he's good at doing it eventually.

1:05:45 Mm-hmm. Um Okay. Well the glaze fest is over. So you hate Elon, or sorry. Yeah. This wasn't the episode for you if you hate Elon.

1:05:56 Um hate to break it to you. Maybe the thumbnail should have given that away, but if you made it all the way here And you hate watched this whole thing. I'm sorry. It's like you know Well, you know the the w the percentage of the population that um they taste um

1:06:10 What is it? Like the thing cilantro. Cilantro, yeah, it tastes like bleach to them, like genetically. Um, this might have been the cilantro for some people, and I'm sorry if it was. Alright, that's it. That's the pod. I feel like I can rule the world, I know I could be what I want to I put my law in it like my day song On the road less travel never looking back

1:06:33 All right, let's take a quick break to talk about a podcast. Cause if you're listening to this, you like podcasts. And what's better than one podcast, another podcast. And let me tell you, another podcast you should check out. It's called Success Story. If you like hearing about different success stories and hearing QA sessions with successful business leaders or hearing keynote presentations or just checking out conversations about sales and business and marketing tactics, is a great podcast for you. So check it out wherever you get your podcasts.

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