The most simplified breakdown of the SpaceX IPO on the internet

alright we are talking spacex ipo the biggest ipo of all time and there's a lot of smart analysis out there they ain't ain't that sam what did you call it the the two guys in a truck version of this what you say two idiots in an s one i feel like i could rule to where i know i could be what i want to put at all in it like a days off on a less travel never 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 promised to be the most relatable analysis you're gonna get because i wanted to nerd out on this myself i was like should i be buying this ipo 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 interesting quirky people are talking about this but check this out style nuggets so that's what we're gonna try to do in the next hour or so i'll just play the character it's all acting but what we 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 could take stuff into space now why do you wanna take stuff into space well one version of take stuff in the space and the origin of the company is let's take man to mars so how do we become multi planetary of species that was the 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 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 nasa was gonna go to mars oh i wonder where 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 we have nothing planned to go past that like he's planning a vacation he's like hey so like i have some free time let's see if we can like take the kids florida and like watch 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 going into space going to the moon that's a very inspiring thing what if we funded admission to take i think it was like a plant it's like a little succulent or something into 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 kick start 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 ic missile basically and they laugh at him they sort of spin his face he realizes like oh shit after two trips to russia they ain't gonna work and like any good entrepreneur does doesn't take no for an answer like like any stubborn genius does he decides i guess i'll build my own he took that personally dude when i was a kid and fourth of july like or like for some holiday we would drive over the river to go to illinois because they sold bottle rockets there and they didn't sell in missouri elon and i are basically the same thing same sure 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 entirely know how it all contributes to the same thing but i do know so that the main reason why he started was that reusable rockets is the best way to make going to space to 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 star link they have x the artist formally known as twitter and then they have x ai i and those four 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 so that's like you know what are be chips what are the chips gonna be used for their own rockets his their own ai so basically he's got x ai which is his ai company and terra fab 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 are already booked out sit five six years in advance already at capacity and the world needs more chips for ai will go ahead and build the largest chip factory in the world the fab sarah at my wife and i we took a road trip and we stayed at a motel and the only head rooms with two twin beds at the motel eight and she was sad she was like i wanna sleep with 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 el elon has done with this company you know it's all of these that he just made a super bad that's he kinda 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 you it'll just be here at the bottom yeah because the the only downside when you look at the analysis of this things that you know twitter revenue was like half of what it was what 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 but then so yeah a super company let's hear super company the company's is 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 creatures 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 any 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 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 it's 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 ant philanthropic is about to go public or something like that you know it's worth around a trillion or nine hundred billion same with open ai the word this word trillion is being thrown around a lot and i wanna put this into context because a trillions is really really hard to understand a building's is hard to understand a million a lot of people can understand that so mh a million if it were a 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 a hundred million seconds a a trillion is thirty two thousand years isn't that incredible it's hard to fathom how large a trillion is that's good thing and and when this ipo happens elon will be the world first trillion on paper at least and we're talking two trillion 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 let's explain let's explain a little about the company so hey i wanna tell you about something pretty cool we have a database of all of the un sexy business ideas that have been discussed on this podcast so hundreds of episodes the team at hubspot went through they pulled out all the un sexy ideas so not the super high tech ones but the simple relatable interesting profitable ideas that we have brainstorm 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 sponsored 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 or just for their own satellites for this product called star so if you don't know what star link is star link 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 star link 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 gang busters so it is basically up like you know it's quadrupled in the last two years they have ten million paying subscribers to star link internet it makes like eleven billion dollars a year and revenue it's like forty percent eb margins it's recurring revenue so the star linked 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 you know essentially media is the internet and they specifically solve the problem in in rural areas so star link 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 the star lake team they worked in seattle and the project was kinda going nowhere so he's like getting status updates and he gets really frustrated one day and then he goes like you ever seen that episode of entourage where ari our gold walks into the office with a pink paint gun and just starts blasting people that he's laying off that's basically what they did to the star project they went there and they just were like what the hell is going on nuke to everybody restarted from scratch and then you know it now is like one of the the greatest sort of businesses in the world right now is just the star business unit inside of inside of spacex okay so that's it that's easy to understand that's that's pretty straightforward easy to understand and then they and the and the 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 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 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 star so there's a question about what that's gonna be worth but then they have this other thing called direct 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 i just hit my call dropped i hit a 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 well they basically can now do star link from the satellite direct to your cell phone so you don't need the little satellite dish like you need for the the home internet service you don't even need that just go straight to your phone so they they partner with t mobile for example and so in areas where we 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 launch their own t mobile right they launched their own star link 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 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 there are you know the 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 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 they're all verizon they're all essentially the same commercial do you like best crazy thanks it's all the same thing who would like what you know is patrick mah homes like your favorite player or you hate that's gonna decide who you go with and so they're the first ones to go in 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 like of the way they're doing it in in in space they don't have to do ground build outs of towers so that's kinda like the the kinda 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 of down by fifty or a hundred x when it was pre spacex so they have like a you know for cost a hundred dollars before it now cost one or two dollars right as a 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 gonna be half of what it currently is they're just like a have a massive cost and volume advantage and launches that lets them have the satellite business which lets them have star okay so that's kind of 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 and you're like you know when you hear this you think i don't know what what the hell you know you think about like really building floating in space yeah it's hard to fathom them i think like we're call 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 answer is we got plenty of room it's hard it we're 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 it 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 data center backlash that the people who even have the money and the engineering chops and the power and the 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 it's really so think about this so i'm history nerd so one of the reasons one of many reasons why the american revolution happened was when american colony 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 for like hey england like we need some help just supposed to we're supposed to like be your country come protect us at england's like dude it so far away 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 watched was like no this is my land this is my land you're not gonna tell me what to do at in 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 fig wild the west 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 rain 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 section off the ocean or water or something like that like who it gets what's 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 the biggest thing 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 and 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 but i was really expensive and and hard to get permitting to build on 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 go to space well i guess we'll just go to build in space then i i don't even wanna talk to it like i i i want so little to do with politics that i was glad i'd rather build this in space and figure 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 their big ass rocket bigger way bigger than the falcon nine and so yeah i think it carries like seven to ten times more payload than the falcon nine and so if you know falcon nine's is bringing up what let's call it ten satellites out of time this thing will bring up seventy satellites out 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 like feet of engineering in human history but there's a question of if so just one some people might not believe that they'll ever get starship to work that's tends to be a foolish bet yeah betting against elon 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 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 ten thousand launches and the the guy was like so wait so that means like you're launching like multiple times a day obvious sleep right like you're launching thirty longer today today 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 airport you know how many times a plane takes off a day and he's like it 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 yeah 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 the the you know get your crumbs off the off the seat and then they go and you know forty five minutes later it's up in the air again 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 bed is is the stars thing ever gonna 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 is even gonna work and there's people who argue that you know the one of the reasons you put it in space it's 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 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're gonna need an insane amount of ai tokens whether that's for you know chat 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 of this space it's powered by the sun you don't need any cooling because space as like you know pay space is basically freezing cold and has like a rad whatever cooling mechanism where as the chips get hot from being used there's like a a a natural physical meg mechanism to cool them down some people argue against that but elon believes that it's the 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 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 kinda where we're at at 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 are wild to me i just like i'm just like learned german yesterday like it's just the fact that lang 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 a like imagine explaining this to someone there's this old man that i hang out with in my building who's was ninety six years old and every time every once in all i go down to his room and he tells me like where he was when jfk died you know it'll tell me cool stories just imagine like explaining this to him like well it's just crazy how fast humans pride you're how old your daughter she's too 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 no idea and yeah know 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 you but he's got something called a camera than that sort of gets like pipe into like those towers there's like cables on the road do you see those there's like satellite and like there's wifi that's a tough one too for me bluetooth kinda like wifi f but something i'd something that's different there for sure and it's showing up on our tv and where's the remote right i've had to experience my 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 like do they ever just say like you know what to be like no no there are so many things out bog my mind about you know today's technology so i'm with you that like there's sound of mind boggling that's crazy but i'll it to but also that someone is audacious enough to keep pushing like keep what okay we did what about this what about this about this right and to have that open mind it's these are engineering feat but these are also personality feeds just like when joey joey chestnut eight seventy hot dog 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 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 dot com the agent customer platform for growing businesses what about twitter and x sai okay so that's kind of insane to me the fact that us rocket company owns twitter yeah you know when you invite someone to your party and then they bring that friend yeah try to 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 billed me my own deep 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 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 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 this stuff as you know has not quite worked he did figure out how to spin it right so he figured out okay the x business is not that great and i can't get the engagement to be as high as you know 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 g and then he tried g now g is falling behind ant and chad gp so he said but but he again you know the 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 g some differentiation but then g hasn't quite kept up with everything else he used his g asset where he's trying to build a chat gp ant drop competitor even though it's way way behind he built the largest beta center for training ai colossus and he's really good at building the machine that builds the machine so he's 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 and produces you know enormous amount of cars faster than anyone else designs and builds he's doing it now with the tariff fab he does it with the rockets he did it with with data centers here so he built the largest cluster of gpus bigger than google bigger than at 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 so 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 g has a hundred you know a hundred billion users whereas chat 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 to airbnb he started renting out colossus to ant philanthropic and to google and so just in the last i don't know two months they announced two deals that i think our combined worth like twenty billion dollars or more 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 ant philanthropic where ant 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 now might just be a temporary stop gap 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 sick 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 that's insane that's such a huge number by the way i have to think the the ninety chest 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've have been smart if they intentionally did that too yeah it was cool do you wanna see any of these slides by the way kinda shit just run you through this and you yeah did you have i could 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 i i told it takes slide to be like i'm charlie manga trying to understand the business and it's like okay charlie mu would ask like is it in my circle confidence how do i lose money here show me the incentives what's the moat prices price what you pay the values what you get it says started to basically breaking out star is the part that makes money x sai is the part that burns it and the rockets of the railroads in between you're not buying spacex you're buying three different companies that are staple together you have the space launch business the connects internet connectivity business and the ai business and then it you know here's the high level numbers so eighteen billion in revenue losing two and half billion six one six of adjusted eb you know i'm gonna bring that up at a second yeah i think that's a that's that's whack the burned a billion of cash last year this is the star 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 you know q one this year was was not 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 or you 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 and a way to survive against codecs x and cloud code and so like you know it's the sort of game theory where where the the the bottom players like in survive form of alliance in order to like to 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 wow he'll know 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 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 package it's pretty crazy we we can go there but anyways ai says charlie mu would put it in the two hard pile it's a wonderful business at a silly price is the ai charlie mon conclusion and it's a great business you could admire it from a afar you didn't need to own it was the it was the conclusion that he had it's just 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 an elon asset is not a normal company so it's it's really it's hard it's hard to price it's it's almost like this weird thing where it i always thought it was interesting whenever you're like going through an m and a process someone will say like i'll i'll 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 pay upfront 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 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 the crazy thing about this and then and even when somebody why would somebody pay fifteen years ahead and it's because you're growing and so yeah it's fifteen years at the current rate i'm looking at the growth that might only be six might only before might your growth rate dependent on like you're you're making the el elon bet which is can he figure it out but i'm like i even know if he exists by the time that like this is like the the you get the sum of your future cash flows on this one well here here's what you'd need to believe you'd need to believe that the star business alone which is at eleven billion in revenue is probably gonna 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 star link as well as the the data centers so you need to believe that starship works you need to believe that data centers in space are gonna be a thing and and with that you'd have to also i i don't think this is as much of a you need to believe as and it's not really a leap of faith it's more of a realization which is you know saudi arabia made trillions of dollars because they owned 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 on compute every single business every single consumer every single robot every single car every single appliance is gonna 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 gonna be giving ai tokens at maybe 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 position to do that currently so they have a a line item or a a a section of the s one that talks about feature business lines and he actually says that mining asteroids is and and potentially mining mars and mining the moon for energy and i 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 let me 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 multi planetary and understand the true nature of the universe and extend the light of consciousness to the stars and then it goes on to say that they wanna 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 to let's just put those side by side dude like you know to connect people but like the the the for ninety nine percent of the people the mission of eddie business is to take the money in your big account and to put it into my bank account okay so it's really challenging for me to compare this to make life multi planetary and make sure that we don't have the same fate as dinosaurs and this just isn't it fair 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 you know i actually want my you know my heart surgeon and my brain searching 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 little 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 a rational to make man wanna do that and that could be noble or you could read into it like kind of a bit of a insecurity personality no that's not how what i'm getting at i i i i wouldn't say that i'm the huge like elon fan but i think this mission is 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 the jan who worked at nasa in nineteen sixty eight the year performance 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 wall street journal had a 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 know if you saw this but spacex ipo is expected to create over four thousand new millionaires including some cafeteria workers who comp whose compensation packages included employee stock options and then this me and the spacex lunch lady a million dude that 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 economics but like with all these new rich people being created with ant and 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 was like i have somebody who's looking the guy walked in literally was not exaggeration he walked in for five minutes without his wife and made an all cash offer on the house at like what they were gonna list 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 yeah i i wonder what's gonna obviously the coastal cities are gonna like you know things are gonna change but i wonder what it means for us of the country what's this say so poor went out for sam bacon 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 ant t which would be worth eighty billion because he was one of the earliest least investors in ant philanthropic 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'd would be you know a three billion plus stake he's got spacex fifteen billion sol salon five billion and his overall portfolio out of you know what he his slash fund that he was 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 liquidate all these when they did the bankruptcy so nobody won actually the people who bought out of the bankruptcy state it's kinda like when tim draper bought all that bitcoin yeah at a low price from the us government when they seized the silk road coin you know it's whoever bought the bit the bankruptcy the assets out of when they did the liquidation that's who won that's insane one one thing that i wanna 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 eb which is earnings before interest taxes depreciation amortization then they do this thing called adjusted eb 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 you know every month my wife and i we sit down and we look at our budget and the we we say how much should we spend last month is that in line with what we predicted whatever and so that could help us future expenses and let us know that we're keeping it to our financial plan every once in a while or or rather in the first six months us doing this we kept saying to ourselves well we took this vacation but like it's a one off it's a one off we you know we took our parents on vacation it was to celebrate this thing and then in month six i'm doing this for 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 gotta up the budget and that's what we're gonna do adjusted eb is just like saying you know you had this one time lawsuit or this one time and i think in the case of a spacex it's about depreciation which doesn't exactly makes sense so 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 that adjust for it doesn't make sense to me does that seem weird to you no i mean i think spot on i think know buffett and among or famously did eb as a as a thing yeah i think there's called it bullshit earnings it's like our and our it's like our earnings are this and then our bullshit earnings are this and especially in a company that's so capital intensive like i think they 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 not a software company and then the adjustments right you know it's like oh except for you know we adjust back in for stock based compensation it's like well that's how you pay the people to do 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 you know the adjustments tend to be far more favorable than that i think there was a a few other funny things do you know they i think they own like two billion dollars with a bitcoin and i think some of the adjustments was that bitcoin price has gone down did see that that's what i need dude i need my adjusted net worth it's just adjusted for my stupid ass investment yeah and then they i know the funny thing was they did a project where they paid a vendor in shares and the strike price of the shares was like four twenty i think was like forty two dollars point twenty cents or something like that and then i think that when they did like a four zero nine evaluation for twitter it was like i'm i'm screwing up the exact numbers but i think if it was forty two billion dollar they made it like forty two billion dollar 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 part of elon i i i i despise his four twenty obsessions is there a hitch hike i've never read hitch he guide to galaxy is there like a four twenty is this like a no a weed four twenty reference or four twenty thing yeah it's a does he i'm oh too right i and i think it's four i think in hitch 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 shout out to the ontario ontario canada teacher's pension fund which in twenty nineteen decided you know what we're gonna slang an investment into spacex back before spacex was pretty obvious and they're gonna make twelve billion dollars this year and 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 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 hip critical did you put a appendix on your slideshow which is funny tweets because 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 for myself i tell you a couple other nuggets gets that i thought were interesting yeah did you see who else is on the cap table no not really so i'm always interested with these ipo 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 watching the knicks game the other day i kept pausing i'm like zooming in i'm like who's court side who's that person that person i'm begging for this cord side app i just want somebody to take a picture of the entire core see 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 a sc the guy the more i wanna know because i would zoom like yes guy shallow me move your head who is that guy yeah it's like i get why you're famous you're hot but who's the i with the triple chin that's courts sided and new balances yeah like how much waste management does he do yeah that's what i all that's all i wanna know is who's the look not even the new york ones when they're playing in san antonio oklahoma i'm just like oh what is the oh he you know he 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 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 sitting at the game and this guy and drake are sitting next to each he looks like he's six years old he's got a a beer belly and he's just sitting in there he looks like he's like laughing hilariously and they've put the camera on drake and everyone's cheering and the guy looks over the 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 the meme actually found that guy's identity and he's significantly wealthier thin drake and he's like this big shot who no one knows that 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 if you see if he actually see someone really famous like feel void it lame no story you go up to him me you ask for a picture 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 them you're a big fan what do do you actually do i think you know what you just said which is like are you famous or something is great because then they have to be like yeah i'm i'm drake i'm a then they just have a blank face i'm a rapper they're like okay and they're like i and you have to start justifying yourself like that would be great i just i wanna do that to drink dude six months ago i saw this guy in the street and he was cool looking can dude he was young he looked around my age and he had this beautiful dog with him and i i was out to eat like on the street like we were at a sidewalk table and he was just staying in there it looked like he was waiting for his wife or something and i walked over him that man a beautiful dog i had to dog it look just like that and i showed him photos of my dog i showed him my tattoo and and i just learned we hung out for twenty minutes yeah i just moved here i'm so like in new york city this and there and i was like cool at these people were like staring at them and i'm like are you famous what what what are what are you doing he goes yeah i just i i play for the knicks my name's is land and he told me his last name what's his last name is it sam what is it cha it dude it 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've have like exchanged like even noticed he's six five he i no i didn't i everyone in new york is like looking like and and me like i just thought who's a dude and you didn't notice he looks like the original jesus like it doesn't he look like jesus i don't know man he didn't he like oh it's jesus that's why everyone's there he didn't look like that no in real life surprised you didn't tell them sorry everyone's staring i have a podcast yeah sorry if you do you use twitter on the mix no we i literally sat with them for twenty minutes talking about his dog and like there was totally by the way some chemistry going on where we could've have like you just moved here i just moved here you know we should you wanna do relationship intertwined and he left it that way and and i i thought he was like a walk on i thought he was just like you know like the lucky guy and then i see him last night i'm like lang what's good dogs i had that my brother has a great move he pulls with famous people where if he sees them he just like he's 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 da 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 the guy seems like he knows me i must know him they just treat them really well and they just da it up and they move on with their day and i've seen them do this now four or five times and i 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 a place and it was just me my daughter and him at the pizza of place and i was like i don't really wanna 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 i was like help walked out way and she walked and like intercepted and like intercept it and he was like oh hey little girl how are you 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 use her child is bait you know naturally think to people back to who's he's famous on this list i'm gonna read you name out i which tell me for you even know who this person is antonio g he's like his buddy who like start 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 you know he has this thing called valor and basically antonio he's in elon 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 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 in to 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 he there's a story about and when when tesla was like on the brink he loaned elon like i don't a million dollars or something like that personally not for any equity just like you need it here you go and so he's gonna make like ninety billion dollars in this my god which is incredible there's also a guy one time when i hosted a hustle con dinner at your office there's this guy named steve who came alright big news we just hit three hundred thousand subscribers on spotify thank you to everybody who subscribe if you're not go there and watch the episodes on spotify it's the best place to watch our podcast and back then i knew steve via my friend neville he owns this thing called or start help start this thing called giga fund have you heard a giga fund mh it's a i it's a fun but sorry by two guys steve who is the i'm acquaintance and we on it luke is the so luke is the one of the paypal founders i believe or 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 giga and it was just fund 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 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 was working i was working i wanna read you an email i have opened right now a email from somebody who used to be at founders fund and giga fund spun out of founders fund luke was at founders fund and then he he left us start giga fund so the email basically says you know one of the smartest and and brave 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 take all the money and put it in the elon companies and at the time that seemed like you know kinda 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 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 you know bitcoin and chill didn't need to do anything like it we all want to do advanced complicated 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 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 of the world had he just not sold his microsoft stock cha off laughed facebook you know started his own fund and then started doing spa and bought the warriors and he's done this and that and this and that and this and that all he had to do is just hold this facebook stock from and he his an employee he would have done better than everything he's done since then so we we seek out sophistication we seek out activity but but simplicity is actually you know the a more powerful thing if you if you get it right and so he this email basically says like i remember when he said that i remember whatever he was thinking and is it like chain email like like he till announce that he was leaving and he sent it to like his buddies no no this is somebody who was at founders fund just emailing me telling me about this and so and i've i've i always kinda stuck with me now when i'm looking at this filing and you see giga fund and luke luke no oh they're listed so they have a huge stake they have a huge day got i wasn't i was never sure how big it actually got but i remember steve through a friend of a friend someone was telling me steve story and he was like he had this company that was like doing really well but he kinda quit it to just do this and i'm like that that's it just that's all he does and i i remember the same i had the same emotion i'm like but why would he there's gonna be more to it and obviously obviously do but you should also do x y z it's like no actually you should not do x y z l in addition should just do the one thing so i thought was pretty funny steve jarvis i oh i thought you were gonna say do you know steve jarvis yeah i do you started d like a fun and i was got his own fun future ventures i've met him once really surprised like just a not really nice guy he's i like future future a true fu interest and if you go i think a a fun interesting read is go google is if you're a true business nerd go google steve j and go look at his flicker that's right flicker like the old photo sharing website for some reason he he he's like a 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 post on flick and write like a mini 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 reading steve's flicker i think it's there's very few true like fu 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 things is to hold through all the the ups his his wife gen aviv was my boss at my first job ever and so i knew gen very well she's cool yeah yeah and she and friends with her on facebook and so like i've seen like this whole thing and like i 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 kinda funny as well yeah and you know i think there one of the reasons on this podcast i try to be more optimistic and benefit of the dow with i don't know technology if you're just 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 pessimistic get to be right and optimistic get to be rich if you hang on 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 opt that's the first thing the second thing is i had a friend recently who 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 a git lab who like is curing his own cancer using ai and you know that sounds like futuristic but like he actually you know did it it's not like a not like a theoretical thing like the you know at least at least one person did it and so he went back home recently and 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 could do this and what i told them i was like you know it's not that oh they're are different types of people they've resisted we don't it's 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 ban four minute mile type of like once you hear that somebody cured their own cancer ai guess what you're gonna approach somewhat you know a loved one with cancer very differently than you would 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 you get your frame broken enough where you will in your own situations of life approach slightly differently and you know because i think part of this is like you know it's just elon gl and it's spacex gl but like another part of it is like 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 know the biggest tech ipo in history you 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 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 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 and then i and then i started changing this to where i see something that thinks 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 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 cannot happen and and you have to train yourself to always think and like not absolute but like the the odds are this but those are still like odds out like if enough people try it could work well speaking of the impossible one thing i wanted to bring up was the his pay package i didn't know this since until i was digging i i thought it was kind of new new learning so you remember at tesla when he had that like crazy you elon had 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 in five hundred billion in value and we're delivering this many cars and we do this and we just then i get this like huge payback package and if i don't i get nothing i've worked like when they sign it they're like yeah dude whatever you do that and that it happens if people freak out over it exactly there's a compilation of people of mocking it laughing being like this is ridiculous it's never gonna happen blah blah so ludicrous but you know whatever and then it happens and he gets the money and then a dude with eight shares susan and 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 to the pay package and then blah you know i got ended up getting re rebooted and reinstated but the plaintiff was like a n that that was basically the argument given yeah it's insane have you seen what his pay packages is here and he has like the same one okay so let me just read this to you so the very first one is called the mars award so elon gets one billion shares in spacex how much what what how many points is that so it's going public at a hundred and thirty five dollars so that'd be a hundred and thirty five billion at today's value but obviously if he did all this stuff it'd be worth a lot more than today's value it'd be the the their total grants 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 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 this is kinda like the 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 t watts of compute per year from non earth data center so he does the space data center thing and delivers a hundred t watts of compute per year now you might be wondering hundred t watts i don't really know how to put that perspective guess how much so he's trying to the he gets it if he does a hundred i guess how much the total kinda current us t production is i don't even know what tara what it is so so we're talking like a unit you said seven hundred and fifty is that what said he wants he if if he does a hundred he gets the awards hundred what is that relative to all in the us so he gets money at a hundred what's the current us i don't know take your 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 pair so we'd have to one hundred x the entire us grid just to get this over in space in from space data centers yes from something that doesn't even exist and people don't even believe as possible so yeah goals yeah set big goals i guess it's it's hard to he that by way base salary on on the way is zero i mean he owns obviously a huge percentage of a company anyways but like this is the additional grant he gets for continuing to work in the company this is crazy man you i'm i it goes back to the factor like the biggest risk is that he dies that's the the biggest risk is that he dies the biggest risk is that he dies like the biggest risk is that he doesn't hit like if i'm a shareholder i'm like you you must have a diet citation you must have a sleep coach like that's what we're talking here or is it like a john jones situation where like the more coach you do that creates a fighter you know what i mean and if you if you put him on that you know sleep at eight apm schedule he's not john jones anymore dude i talk to 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 the exactly what i said and came to me all the time it said give me more i want more i wanna do this they almost always were never as good as the guys who were like eating m and m's or doing skid like eating skid eating poorly and like going to bed at lake because they played the video again so night and they just show up and like he was like one guy made like a game winning shot and afterwards i was so excited i ramp at high five him and he's like what are doing man he's like he did the shot he's like whatever dude who cares and you're like kept why he's like the guys who cared you know treat a mean keep them keen the guys who cared the least amount and like tried not exactly tried but like put a 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 like can you make starship work can you make it oral data center work is like we think the higher risk is just that he dies it's like in the probabilities game where i don't know the bigger risk seems like that it just it's you've learned so many times in a row the it's it's not wise to bet again so i i don't think that like i'm a dumb idiot and i wish you preface this before this episode don't listen anything but the one thing that is true is that he's a challenging person to bet against and so all these science fiction things so i i i i think that he's bad at timelines but i think he's good at doing it eventually mh okay well the glaze fest is over so you hate elon we're sorry yeah this wasn't the episode for you if you hate elon 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 you know the the that percentage of the population that they taste what is it like the thing it's cilantro cilantro like bleach to them like genetically 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 could rule to where i know i could be what i want to put at all in it like a day's off on a road less travel never looking back alright let's take a quick break just talk about a podcast if you're listening to this you like podcast 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 q and a sessions with successful business leaders or hearing keto presentations or just checking out conversations about sales and business and marketing tactics this is a great podcast for you so check it out wherever you get your podcast