Elon Musk the trillionaire... does the global economy need him to succeed?

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1:14Hello, it's Anthony and you're about to hear AmeriCast. We're delighted to have you with us. And if you enjoy what you hear, please do consider subscribing to the podcast. That way, you'll never miss an episode. Now, on with today. We're going to go behind the scenes today, looking at why Elon Musk has become a trillionaire and why the US needs him to succeed as financial institutions and investors all around the world take a huge gamble on his unique vision becoming reality. We want to be able to take anyone who wants to go to the moon, anyone who wants to go to Mars or anywhere in the solar system and maybe beyond the solar system at some point.

1:51We want to be able to take you there. Not just a few astronauts. I mean you, literally you. So as financial institutions, investors across the world put their money behind Elon Musk and his sci-fi strategy, which includes putting artificial intelligence data centres into space as well, as well as sending people, of course. How risky is all of it? And it's not just Elon Musk with big AI companies also planning to float on the stock exchange later this year with promises of what AI will do. What does it mean, not just for the US economy, but the global economy as well? Welcome to AmeriCast. AmeriCast.

2:32AmeriCast from BBC News. You hear that sound? Oh, I think when I hear that sound, it reminds me of money. We didn't start this war, but under President Trump, we are finishing it. This is a big cover-up, and this administration is engaged in it. This guy has Trump-durated I have four words for you. Turn the volume up.

2:58Hello, it's Justin in the worldwide headquarters of AmeriCast in London, England. And it is just me, at least just me in the worldwide headquarters. But I'm delighted to say I'm joined on the line by Ryan Mack, who is an investigative technology reporter and an author as well at The New York Times. He's been investigating not just Elon Musk, but the tech companies, the tech billionaires for years. So he's exactly the right guest to talk to about Elon Musk, but also about the wider world that is beginning to take shape around us. And indeed, the wider world that is beginning to take shape potentially outside this world as well.

3:34So, Ryan, so good to talk to you. Thanks for joining us. Thanks for having me. Let's start with this word trillionaire, because I'm not sure I even know what a trillion of anything is. and sometimes it's different in English, English and American English. What is a trillionaire? And has he actually got a trillion dollars in the bank? A trillionaire is someone with 13 figures in their net worth. You know, we've never had anyone hit that level of wealth before. You asked, does he have that amount of money in his bank account? Technically, no. Most of that is in shares of SpaceX, which is not, you know, easily liquid.

4:10but on paper he has reached the mark of trillionaire. And the point you make about the shares is important, isn't it? Because we should explain what has just happened and why he is now, at least on paper, so wealthy. So it was a private company, wasn't it, SpaceX? What has changed? Yeah, so SpaceX has been a private company since its founding in 2002. And, you know, recently, at the beginning of this year, the company decided we want to sell our shares to the public, allow people to own this company and have an IPO, an initial public offering. You know, these are singular events in a company's history to raise, in this case, tens of billions of dollars.

4:50And that's what happened here. They sold their shares in the public market. The company went public and the company raised about 75 billion dollars in cash. And I don't want to get too nerdy about this, but he's done it in a way, hasn't he, where he keeps, Elon Musk keeps quite a lot of control. Yes. Even after going public and selling shares to the world, he retains about 82 % voting control over the company. You know, a super majority where he essentially is the sole decision maker of any major corporate decision. So he, even though people, you know, around the world have shares in this thing, he's the one that makes and calls the shots.

5:35he has kind of said take it or leave it you know you get me or you you don't get anyone else yeah so so that's interesting so you not only are you buying into his vision but you're buying into his future visions about which you know nothing indeed he might not know anything at all given what an unusual person he is and we'll get to that in a in a second but you you are buying into really into the unknown aren't you you are and that's actually what spacex is sort of built upon at least what it's selling to the public are these very fantastical concepts. And if they're achievable, or if they get achieved, you know, the company would probably be worth that much.

6:13But right now, these are just concepts. And some of the ideas that have been proposed as business plans include, you know, building data centers in orbit, you know, these AI data centers, other ideas have been building a human colony on the moon. And then, of course, the kind of The North Star mission of the company is to get people to Mars. And, you know, all three of those ideas are just concepts on paper at this point. Yeah. And but concepts on paper that have really taken off in people's minds, because the initial days of this offer and subscriptions to this offer have been a fantastic success, haven't they?

6:54Yeah, the stock in the first couple days of trading have shot up, so much so that the company surpassed tech giants like Amazon in terms of valuation. The stock's down a little bit on Wednesday, but what we're seeing here is just a lot of people wanting these shares. And part of that is because there's such a small amount of the company that is publicly traded, about 4%, a little more than 4 % of existing shares are publicly traded. So it maybe has created a bit of artificial demand here. But, you know, the stock has gone up and has performed decently well in its first couple of days of being a public company.

7:36Yeah. And nobody has pretended, least of all the man himself, Elon Musk himself, nobody is pretending that any of this is not without risk. They're all being pretty open about this, including Elon Musk. We ought to listen to him, actually. This is a ceremony to mark the IPO in which he talked about his vision and indeed the past of SpaceX itself. I give SpaceX less than a 10 percent chance of succeeding at all, to be clear. In fact, I told people this. I said, look, we're probably going to fail, but we should give it a try, because if we don't, if there's not a new company that enters space, we will never be a truly space-bearing civilization.

8:21While the other aerospace companies, they build good rockets and everything, they were simply not pursuing the technology that's necessary to make life multi-planetary.

8:34to make Star Trek, to make the exciting science fiction futures that we've read about real. We want to be able to take anyone who wants to go to the moon, anyone who wants to go to Mars, or anywhere in the solar system, and maybe beyond the solar system at some point, we want to be able to take you there. Not just a few astronauts, I mean you, literally you, if you watch whoever you are watching this SpaceX wants to be able to take you to the moon take you to Mars and ultimately beyond and can we say now that he's got the money to do it I don't know taking people to Mars is going to be quite expensive and again unproven you know I look at that and I I'm sort of torn in some ways I can see why it's inspirational and what SpaceX has done in terms of building these self-landing rockets or building satellite internet that's affordable is quite inspirational for a lot of folks.

9:33And they see these launches that happen. At the same time, he's talking about Mars there and what's possible. And a couple of years ago, he was predicting that we'd be on Mars essentially by this time. And so when you're an investor, you know, I don't know if you can invest just on inspiration. You know, you should probably invest in financials and achievements and whether or not you hit your promises. and yeah but you're being you're being um earthbound there ryan quite properly probably and let me make it clear well neither of us are giving investment advice here but there's something about the man himself and i want to ask you specifically about him ryan because often he's portrayed as a kind of bond villain elon musk and you think of x and all the controversies about x there is something, it just seems to me, and I'm almost going to say uniquely American about him, because of the kind of sense that this is all this striving, and it really genuinely doesn't matter to people if he fails.

10:41I don't know how they're going to feel if the money goes down the tubes as well. But there is this real sense, isn't there, of wanting him to succeed? Yes, in some ways, there's something uniquely American to it. This idea of, you know, coming to the US and striving and achieving these, you know, incredible dreams, you know, running two companies, building them up to trillion dollar valuations, and becoming the, you know, Horatio Alger, pull yourself up by your bootstraps kind of American success story. And so I think that's where a lot of people draw their inspiration from him. You mentioned the idea of him being a Bond villain earlier, but I think there are, I don't know, I wouldn't say I'm a jerk, I don't know where the numbers pan out, but there are a significant amount of people that see him as a hero and see him as someone who is advancing American civilization or global civilization.

11:38And also you don't have to like him as a person, I suppose. That's the other point. I think he's a complex character. Like on one hand, you can see the achievements. On the other hand, people have to understand, you know, his involvement in politics and his constant tweeting and what he's saying online in terms of what he is fomenting. But I view him as a complex character, and that's how I always kind of approach my reporting with him. Just a final thought about Elon Musk himself. Is it fair to say as well that not all of the companies have worked out? Because that's an important part of him, isn't it?

12:10This kind of risk taking. not everything that he has tried to do has worked has it well it's interesting i think he has been if you look at some of the things he has failed at his companies for example spacex with mars mars has been the north star of spacex for basically since its founding the idea of getting humans to mars making life multi-planetary you know he has set a timeline for mars that he has simply not achieved if you look back at his statements he has said you know we get people to Mars by around this time. But, you know, while he has technically failed on that level, he has been able to replace the goal of Mars with other things and find other things for people to fixate on and be like, you know, I've achieved these things in the meantime.

12:57And if you look at the current goals of the company, you know, Mars has kind of been placed on the sideline, you know, now they're talking about orbital data centers, and, you know, factories on the moon and colonies on the moon. But in some ways, Musk's greatest trait is as a salesman. He's able to sell people on kind of the latest shiny goal, and maybe get them to forget that he said these things or predicted these things that didn't come to fruition. Well, he certainly sold this IPO, hasn't he, to financial institutions. So we were saying earlier, a lot of people around the world are wanting to invest, but of course, big financial institutions, and indeed NASDAQ, the actual exchange that is going to be quoted on, or it is now quoted on, even changed their rules, did they, to get it on?

13:44Yeah, this is quite controversial, I guess. But the NASDAQ has an index called the NASDAQ 100, which, you know, people use to trade if you want to have an index fund. A lot of people with retirement funds invest in index funds so that they trace the developments of the U.S. economy, for example. And the NASDAQ 100 has certain rules that in order to be listed, you have to abide by. One of them, for example, is you have to be a publicly listed company for a certain amount of time. You just can't immediately hit it after an IPO or something called a cooling off period, allowing the stock to essentially find an equilibrium on the market so that there's not wild fluctuations in the price.

14:29Well, the NASDAQ 100 will relax a lot of these rules so that SpaceX could get into the index, specifically rules around timing. And that will then essentially put it into the index where these passive funds will essentially be forced to buy SpaceX because they trade using the parameters of the NASDAQ 100. And so what you're going to see in a couple of weeks time is a lot of these passive investors buying into the company, maybe unaware that they're investing in SpaceX because they're trading using indexes like the Nasdaq 100. So actually, even people who've made no conscious decision to buy into all of this are actually, through their pensions, if nothing else, are going to be bought into it.

15:19Everyone is tied up with Elon Musk on this now. And to be fair, that's kind of the point of these index funds is like, you don't, you know, maybe you don't know that you're invested in Walmart or you don't know you're invested in whatever oil company. But I think what's interesting here is just how many rules have been relaxed for SpaceX per the requests of the company. Like this was a strategic move that the company pursued largely because they wanted, you know, more demand for the stock. But if you're invested in Walmart or all the rest of them, that will be a relatively small part, presumably.

15:55The risk, I suppose, and this then brings us on to the wider picture as well. The risk is that particularly with passive funds that pensions are invested in, etc., etc., that actually a surprisingly large slice of those funds in the future is going to be taken up by SpaceX and by the other big companies that are also about to go public, OpenAI and Anthropic. But there are others as well, aren't there? We're about to see a large amount of IPO activity and fluctuation in the American stock market. These are companies nearing a trillion dollars in valuation. And if both of those companies happen this year, you'll get this kind of bonanza of IPO activity.

16:39You'll have SpaceX, Anthropic IPO, trillion or near trillion dollar companies that are about to go public. And that's really never happened before in history. So you get this kind of massive amount of tech activity all involving, you know, AI, essentially. Just to emphasize, never before in history, never before in history, what this size of offering. Yeah, the size of offering, the scale of these companies. I mean, a trillion dollar market cap or valuation was unheard of as of a couple years ago. And now you're having companies, three of them possibly going public at trillion dollar valuations.

17:19That's kind of astronomical. I guess it shows just how much interest there is in AI, how much potential investors see, and just, you know, they believe there's appetite for these stocks. And as you were saying right at the beginning, not just people, but data centers, which sort of links it all together, doesn't it? Because they all need data centers. We know, in fact, we did a recent episode on the political, the sudden political fight back against data centers right around the United States. And here's Elon Musk saying, it's okay, we'll stick him in outer space. And if he manages to do it, again, that's a sort of circular thing, isn't it, which leads to profitability, increased profitability among all of these companies.

18:06It's very Elon to play into this sentiment, right, this anti-earth-based data center sentiment. Ironically, particularly because his company has built two very large data centers in Memphis that have caused quite a bit of controversy. And so this idea behind orbital data centers is, look, we have constrained resources in terms of land, water, power on Earth. You know, we'll solve all that by throwing these things up into orbit. But they've completely pivoted its goals to being essentially an AI company. There's AI part of this business was bolted on about a year ago. It was not in the company's plans.

18:53And now Elon Musk sees this as kind of a money driver, a means to revenue and profitability, even though it's just a concept. What if it all goes wrong, Ryan? What happens to the US economy? How dependent is the US economy now on this sector, on these offerings, both the SpaceX one that we've now seen and the other ones that we've just been talking about that are in the offing? If it does, for some reason, go badly wrong, what happens? I mean, AI is the primary growth driver of the US economy at this point. Just look at how SpaceX has done on the stock market. It's kind of bonkers. You know, the bear case for these companies is, let's take the bear case for SpaceX.

19:40He's been on a podcast saying that he thinks in 36 months, the cheapest place to operate data centers essentially is in space in 36 months. So in three years, he believes AI data centers will be viable. So he's given himself this kind of timeline here and kind of boxed himself in. Will he hit it is kind of the big question. But if he doesn't, you may start to see a little wobble in the economy. If these AI data centers aren't reliable, then you'll certainly see people that will start to doubt the company for sure. And if you see that wobble and it's a stock market wobble, what impact does that have on the wider economy?

20:18So, I mean, you say growth in America and it's a simple fact, isn't it? The growth in America at the moment is hugely driven by all of this. does it have an effect that you can see that you can feel that's tangible to to people around the united states if it goes wrong i mean look this we're not just talking about spacex either or anthropic or opening i there are massively public companies that are pivoting their whole companies towards ai i think of meta google microsoft you know these trillion dollar apple for example trillion dollar companies that are betting this on being the future. And, you know, the numbers have have borne out and showed that, you know, this AI technology is being adopted.

21:04There is certainly some use cases for it. But it is fundamentally shifting the economy. And so let's say in a couple of years time that it is not this AI boom is not everything we expected to be, we may get a correction similar to what we saw with the dot-com bubble for example you know there's all this hype initially all these companies going public and then you get kind of this bus cycle and out of that bus cycle you know a couple companies figured out how to make the internet work as a business but that's fascinating what you've just said is fascinating is because you can think of that and you can think way back to the building of the railways when there was boom and bust as well wasn't there so in the 19th century they build all the railways and then they build too many and the business model isn't right and a lot of the companies go bust but you still got the track and with the internet as you've just said you still you still got the the digital economy as it as it then became so there is this real fear and you've said it out that there could be a wobble and worse and it could have an effect on the wider economy there is something about all of this isn't that just is that ability to lay down things that in the end change life, make economies more productive, etc., that is done in America to a greater extent than it's done elsewhere.

22:27I suppose you look at China now a bit and wonder whether they found a different model of doing the same thing, but elsewhere in the world, not. In terms of innovation or in terms of... Yes, in terms of innovation and the ability to take risks and then benefit from them. Yeah, I would say, you know, AI and China are certainly leading the AI race right now. And that's what's driving a lot of the global economy. But yeah, I think I'm thinking back to your point on like boom and bust, right? And, you know, I guess at this point, you're looking at what does success look like for you? And what's your time horizon?

23:00If it's short term, maybe you think some of these companies will not be as successful with AI development. And like, your choice is, as an investor is what horse are you betting on here? Are you betting on SpaceX, and this vision of orbital data centers? Or are you betting on Anthropic, which has, you know, this kind of vibrant AI coding business and large revenues and that kind of thing? And what company do you see as successful in 5, 10, 15 years time? You know, what's going to be the pets.com of the AI age that It just kind of fizzles out. That's a great open question, Ryan, on which to end.

23:37It's been such a pleasure talking to you. Ryan Mack from The New York Times. Thank you very much. Thanks for having me. OK, that's it from Ryan and from me. Bye-bye.

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24:58When you hear the phrase made in China, what do you think? I'm Tristan Redman. And I'm Asma Khalid. And together we host the Global Story podcast from the BBC. And today on our show, we look at the origins and evolution of made in China, because it actually wasn't inevitable. What we're talking about is the world's largest communist nation is at the beating heart of the capitalist system. For more, listen to The Global Story on BBC.com or wherever you get your podcasts.