The most simplified breakdown of the SpaceX IPO on the internet

23:22So I'm with you that this sounds mind-boggling. That's crazy.

23:27Sam Parr:But also that someone is audacious enough to keep pushing. Okay, we did that. What about this? What about this? What about this? And to have that open mind. These are engineering feats, but these are also personality feats. Just like when Joey Chestnut ate 70 hot dogs at the Coney Island Hot Dog Contest when the previous record was 19. That's what we're dealing with right now. and it's just unfathomable. It really is. It truly, truly is. Hey, let's take a quick break. You know that feeling when strategy is done, the brief is written, everyone's aligned and you realize someone still has to sit down and actually create all the content?

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24:23Sam Parr:Okay, so that's kind of insane to me. The fact that a rocket company owns Twitter. Yeah. You know when you invite someone to your party and then they bring that friend? Yeah. That's kind of the Twitter problem right now. And I think it was sold for$250 billion to SpaceX. Is that right? So I did a lot of my thinking with Claude yesterday for this. and I had Claude build me my own deck about SpaceX. Here's one of the things about Twitter. So Twitter's ad business is 40 % the size of old Twitter. So X advertising is at 1.8 billion now. It's down 100 million from last year. And it's half of what the ad revenue was before he bought it in 2021, five years ago.

25:06He added subscriptions and payments, whatever. So that's now a billion dollars in ARR. So the total, you know, is 2.8 billion. And it was 4.5 when he bought it. So the X stuff has not quite worked. He did figure out how to spin it, right? So he figured out, hmm, okay, the X business is not that great. And I can't get the engagement to be as high as WhatsApp or Instagram or TikTok or any of these other apps. But what it does have is data. And maybe I can use that data to power Grok. And then he tried Grok. Now, Grok is falling behind Anthropic and ChatGPT. So he said, but he, again, you know, I think one of the great hallmarks of entrepreneurship is basically a failing forward.

25:50And so maybe in the same way that X sort of failed forward into like, oh, well, it gave Grok some differentiation, but then Grok hasn't quite kept up with everything else. He used his Grok asset, where he's trying to build a ChatGPT anthropic 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 basically, what he's the best at is building factories at this point. And so, you know, Tesla has its own factories and produces, you know, enormous amount of cars faster than anyone else.

26:29Designs and builds. He's doing it now with the TerraFab. He does it with the Rockets. He did it with data centers here. So he built the largest cluster of GPUs. bigger than Google, bigger than Facebook, bigger than anyone. The problem is he doesn't have enough users. So he has this like, you know, he bought a huge mansion and doesn't have any friends to come over to entertain. Well, because what does Twitter have?

26:51Sam Parr:I think you say 500 million. That's shockingly, 500 million is still, this is amazing, a niche social media network. Yeah, and Grok has 100, you know, 100 million users, whereas Chachapiti has a billion, so 10 times smaller. And so he doesn't have the use of it. So what did he do? He just turned into Airbnb. He started renting out Colossus to Anthropic and to Google. And so just in the last, I don't know, two months, they announced two deals that I think are combined worth like$20 billion or more, a billion dollars a month, so$12 billion a year to use his data center. And that's Google. Google themselves was the best at building data centers.

27:34And they need to rent from Colossus. And then same thing with Anthropic. where Anthropic is paying, you know, over a billion dollars also a month to rent out. Now, these are short-term agreements. They can cancel with like 90 days notice. So who knows, five years from now, it might just be a temporary stopgap solution. But again, failing forward, like figuring out like, okay, are we fucked? No. What if we did it this way? And then finding a way to survive and advance.

27:56Sam Parr:Yeah, they basically like, they put this S1 out, I think four or six, I forget when, one or two months ago. And I think it was last week or maybe a Monday. it was almost like a quiet amending of the document that says, hey, Google just signed up to spend a million dollars, a billion dollars a month with us to become a customer. And that's insane. That's such a huge number. By the way, I have to think the 9D chess move there was that they knew and they staggered the, they sort of staggered the announcement. Maybe it was truly, oops, forgot to mention this, but I think it would have been smart if they intentionally did that too.

28:34Yeah, it was cool. Do you want to see any of these slides, by the way? Can I just run you through these? Did you have a sit down with your wife?

28:41Sam Parr:And you're like, okay, so hear me out. And you showed her like every slide. No, that's you. I'm doing that with you, right? I told it to explain it to me like I'm Charlie Munger trying to understand the business. And it's like, okay, Charlie Munger would ask, like, is it in my circle of competence? How do I lose money here? Show me the incentives. What's the moat? Price is what you pay. The value is what you get. And so I started to basically break it down. Starlink is the part that makes money. XAI is the part that burns it. And the rockets are the railroads in between. You're not buying SpaceX.

29:09You're buying three different companies that are stapled together. You have the space launch business, the internet connectivity business, and the AI business. And then here's the high-level numbers. So$18 billion in revenue, losing$2.5 billion, $6.6 of adjusted EBITDA. I'm going to bring that up in a second. Yeah, I think that's whack. They burned$8 billion of cash last year. This is the Starlink business. So it grew from 2 million subscribers to 10 million subscribers. But you can see like it is starting to slow down. So that's like one cause for concern was that Q1 this year was not high growth.

29:44And that the average revenue per paying user as they go into like more third world use cases of who needs internet where they have low connectivity, obviously they can't charge as much. They dominate the rocket business 85 % of all launches, 80 % of all mass to orbit. Let's see. Everything is dependent on Starship, which is not a guarantee. And that's the big question. And then, oh, they also bought Cursor. So they bought Cursor for$60 billion or have an option to buy Cursor for$60 billion. And Cursor, I think, is at$3 or$4 billion in revenue. And so, again, trying to play catch-up in the AI game by merging.

30:20Cursor needed to figure out a way to have compute and their own models and a way to survive against Codex and Cloud Code. And so it's this sort of game theory where the bottom players in Survivor will form an alliance in order to flip the game on its head, basically. Let's see if there's anything else here. Oh, he owns 42 % of the company. Do you know this? Wow, no. It's amazing. After 20 years, and you would think rockets are the most capital-intensive business that he's had to raise for. For him to still own 42%, just to put that in perspective, like Aaron Levy from Box, which is like cloud, you know, a folder in the cloud.

30:58I think he owned 4 % of box when it went public and he somehow still owns 42 % and has 85 % of the voting control. Like, unbelievable. Yeah, I have some other things about his comp package. It's pretty crazy. We can go there. But, anyways, AI says Charlie Munger would put it in the too hard pile. It's a wonderful business at a silly price is the AI Charlie Munger conclusion. And, it's a great business. You can admire it from afar. You didn't need to own it was the conclusion that he had.

31:25Sam Parr:It's just logic doesn't particularly matter. I don't think that you can use a traditional way of looking at this. An Elon asset is not a normal company. So it's hard. It's hard to price this. It's almost like this weird thing where I always thought it was interesting. Whenever you're going through an M &A process, someone will say, I'll buy this company for 15 times earnings. And what I like to do is change earnings to the word years. So it's like, I'm going to give you 15 years of payment up front. And when you look at this, 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.

32:10Sam Parr:Is it a hundred years? Is it hundreds of years? Is it 50? I'm not sure. But however, the length of it is at this point, it's so big likely that it's like, will Elon die or not? I think the crazy thing about this, and even when somebody, why would somebody pay 15 years ahead is because you're growing. And so, yeah, it's 15 years at the current rate, but looking at the growth, that might only be six, might only be four. But your growth rate is dependent on like, you're making the Elon bet, which is, can he figure it out? But I'm like, I don't even know if he exists by the time that like, you get the sum of your future cash flows on this one.

32:46Well, here's what you'd need to believe. You'd need to believe that the Starlink business alone, which is at$11 billion in revenue, is probably going to grow to$30,$40,$50 billion in revenue over the next, let's call it, five years. You need to believe that Starship works and that they can take, you know, so they can scale both Starlink as well as the data centers. So you need to believe that Starship works. You need to believe that data centers in space are going to be a thing. And with that, you'd have to also, I don't think this is as much of a you need to believe, as in it's not really a leap of faith, it's more of a realization, which is, you know, Saudi Arabia made trillions of dollars because they owned the oil.

33:29They were the largest and lowest cost producer of oil and energy and the world ran on energy. Well, if you look at the next 20 years, it seems like the world is going to run on compute. Every single business, every single consumer, every single robot, every single car, every single appliance is going to have a compute need. And so then there's a question of who's the Saudi Arabia of compute? And what you would be thinking with, if he goes to, if he's the one who could put data centers in space and data centers in space are going to be giving AI tokens at a maybe, whether it's 50 % or 200 % lower cost than ground-based compute for inference, then he's Saudi Arabia in space.

34:15And he's the only one positioned to do that currently.

34:17Sam Parr:So they have a line item or a section of the S-1 that talks about future business lines. And he actually says that mining asteroids and potentially mining Mars and mining the moon for energy. And I guess that potentially means some type of oil or something like that. And so they actually have that covered as well. Yeah, of course, naturally, mineral mining. So 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.

35:02Sam Parr:And then it goes on to say that they want to create like a specie level redundancy. So consciousness isn't tied to one planet and that they don't want humans to have the same fate as dinosaurs. That's what it says at the top. That's the mission of the company. Is that crazy? What's the Hampton mission? Let's just put those side by side. Dude, like, you know, to connect people. But like for 99 % of the people, the mission of any business is to take the money in your bank account and to put it into my bank account. Okay. So it's really challenging for me to compare this to make life multi-planetary and make sure that we don't have the same fate as dinosaurs.

35:45Sam Parr:This just isn't fair.

35:49Sam Parr:So that's kind of incredible. Also, I've met a few doctors, surgeons that have like kind of a God complex. And in some ways, it's like, look, if that's what it took to get you to become the best. You know, I actually want my, you know, my heart surgeon or my brain surgeon to have a bit of a God complex, a bit of a savior complex. I don't mind that he's got a bit of a God complex, a bit of a savior complex. It's okay. That's what it takes for just to be like, hey, you're already the richest man on earth. You want to sleep on the factory floor. You want to go ahead and build these and put it all on the line again.

36:20It takes something that is irrational to make man want to do that. And that could be noble or you could read into it like, it's kind of a bit of a insecurity personality defect.

36:31Sam Parr:No, that's not what I'm getting at. I wouldn't say that I'm the huge like Elon fanboy, but I think this mission's awesome. No, I think it's great. I 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 janitor who worked at NASA in 1968, the year before we went to the moon. And they said, sir, what do you do here? He goes, I'm helping us get to the moon. Like, I think that's awesome. I think the Wall Street Journal had an article on the blue collar workers at SpaceX and how much money that they were going to make on this.

37:05Sam Parr:And they all seem incredibly inspired. So, no, I'm on board. I think it's awesome. So look at, I don't know if you saw this, but SpaceX IPO is expected to create over 4 ,000 new millionaires, including some cafeteria workers whose compensation packages included employee stock options. And then this, me and the SpaceX lunch lady, she becomes a millionaire. Dude, that's so crazy. Yeah, I think it's great. The amount of wealth that's going to be created, I actually wonder, I don't know enough about economics, but with all these new rich people being created with Anthropik, ChatGPT, and SpaceX, I wonder what that's going to do just to housing prices.

37:41Sam Parr:Obviously, San Francisco is insane. Have you been seeing anything in San Francisco? My sister just sold her house, but it was like pre the IPO chatter. And she literally, she didn't put it on the market. She bumped into a real estate agent and was like, I have somebody who's looking. The guy walked in, literally, this is not an exaggeration. He walked in for five minutes without his wife and made an all-cash offer on the house at what they were going to elicit 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.

38:15Sam Parr:I wonder what's going to... Obviously, the coastal cities are going to... Things are going to change. But I wonder what it means for the rest of the country. What's this say? So, pour one out for Sam Bankman-Fried. He's on the, there's a lot of winners out of this IPO. He would be one of the losers out of this IPO because he had an investment in SpaceX that would have been worth$15 billion. And his overall portfolio, he had Anthropic, which would be worth 80 billion because he was one of the earliest investors in Anthropic. He had Robinhood, which would be about 5 billion. He had Cursor. He was one of the, I think he was literally the first investor maybe in the first round at least.

38:48And that would be, you know, a 3 billion plus stake. He's got SpaceX, 15 billion, Solana, 5 billion. And his overall portfolio out of, you know, his slush fund that he was inappropriately using, illegally using customer funds to go invest, it'd be$114 billion today. He'd be seen as one of the greatest investors of all time. Who gets those? Who gets the shares? So they liquidated all these when they did the bankruptcy. So nobody won, actually. The people who bought out of the bankruptcy estate, it's kind of like when Tim Draper bought all that Bitcoin at a low price from the U.S. government when they seized the Silk Road Bitcoin.

39:25You know, it's whoever bought the bankruptcy, the assets out of when they did the liquidation. That's who won.

39:33Sam Parr:That's insane. One thing that I want to call out, and I don't have a good explanation for this, but they talked about in the S1 about having like, okay, so the way it works is you see EBITDA, which is earnings before interest, taxes, depreciation, amortization. Then they do this thing called adjusted EBITDA, which in my opinion makes no sense. I guess there's a lot of reasons as to why they do it, but the best way that I could explain it is, you know, every month my wife and I, we sit down and we look at our budget and we say, how much did we spend last month? Is that in line with what we predicted?

40:07Sam Parr:Whatever. And so that can help us produce future expenses and let us know that we're keeping to our financial plan. Every once in a while, or rather in the first six months of us doing this, we kept saying to ourselves, well, we took this vacation, but like - That's a one-off. It's a one-off. You know, we took our parents on vacation. It was to celebrate this thing. And then in month six of doing this, we're like, you know, we just took this other once-in-a-lifetime vacation. And you know what? I think we just have to, like, assume that we're going to have these, like, one-off things. Gifts, vacations, buying a car.

40:35Sam Parr:So we just got to up the budget, and that's what we're going to do. Adjusted EBITDA is just like saying, you know, you had this one-time lawsuit or this one-time— And I think in the case of SpaceX, it's about depreciation, which doesn't exactly make sense. They're like, we're going to have this one-time depreciation. I think that's what it said. Plus earnings before interest and depreciation. I don't understand why you would add, adjust for, it doesn't make sense to me. Does that seem weird to you? No, I mean, I think spot on. I think Buffett and Munger famously hated EBITDA as a thing. I think they just called it bullshit earnings.

41:07It's like, our earnings are this, and then our bullshit earnings are this. And especially in a company that's so capital intensive, I think they had like 20 billion of CapEx spend in the last 12 months or something like that. Obviously, depreciation is very, very real. I think for software companies, you know, it could be a little bit different, but this is not a software company. And then the adjustments, you're right. You know, it's like, oh, except for, you know, we adjust back in for stock-based compensation. It's like, well, that's how you pay the people to do the work. So why do you keep adding that back in?

41:35Is 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.

41:46Sam Parr:I think there was a few other funny things. I think they own like$2 billion worth of Bitcoin. And I think some of the adjustments was that Bitcoin price has gone down. Did you see that? That's what I need, dude. I need my adjusted net worth. It's just adjusted for my stupid ass investments. Yeah. And the other funny thing was they did a project where they paid a vendor in shares and the strike price of the shares was like$420. I think it was like$42.20 or something like that. and then I think that when they did like a 409A valuation for Twitter, it was like, I'm screwing up the exact numbers, but I think if it was$42 billion, they made it like$42 billion, like$420.

42:29Sam Parr:And like if you do like a Control-F,$420, it's everywhere. And that's kind of insane. It's the most try-hard part of Elon. I despise his$420 obsessions. Is there a Hitchhiker's, I've never read Hitchhiker's Guide to Galaxy. Is there like a$420? Is this like a weed 420 reference? It's a weed 420 thing, yeah. Hey guys, I'm cool too, right?

42:54I think in Hitchhiker's Guide, it's like 42. That's the number for the universe. But that's not, I think, why he's doing 420.

43:01Sam Parr:Okay, well, yeah, I wasn't sure. But that's pretty silly. What's this? Shout out to the Ontario Canada Teachers Pension Fund, which in 2019 decided, you know what? We're going to slang an investment into SpaceX back before SpaceX was pretty obvious. And they're going to make$12 billion this year in the IPO, which, you know, more than funds their pension. It's, you know,$33 ,000 per teacher that's in the fund for the 300-something thousand teachers that are 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.

43:42Sam Parr:but like whoops yeah that's pretty hypocritical did you put a appendix on your slideshow with just 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 work myself I had to tell you a couple other nuggets 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 IPOs like who you know I don't know this episode this part of the episode is brought to you by Pocket Watchers. I want to know who else is getting rich out of this. Of course, yeah.

44:16Sam Parr:Dude, when I was watching the Knicks game the other day, I kept pausing. I'm like zooming in. I'm like, who's that person? Oh, Courtside? Who's that person? Dude, I'm begging for this Courtside app. I just want somebody to take a picture of the entire Courtside seats and tell me who everyone is, what they do, and how they made their money. And I'd like that for every single game. At least every playoff game. The schleppier the guy, the more I want to know. Because I would zoom in. I'm like, this guy. Chalamet, move your head. Who is that guy? Yeah, it's like, I get why you're famous. You're hot.

44:38Who's the guy with the triple chin that's courtside and new balances? Yeah. How much waste management does he do? Yeah, that's all I want to know is who's the schleppiest looking person. Not even the New York ones when they're playing in San Antonio or Oklahoma City. I'm just like, oh, what is this? Oh, he, you know, he collects all the used chicken wing bones from restaurants all around the country and turns it into bone broth. Like, oh, that's what this guy does.

45:04Sam Parr:There's this funny video of this like guy who looks exactly like you're describing. I think I forget exactly where it was, maybe Canada, but Drake's sitting at the game. And this guy and Drake are sitting next to each other. He looks like he's six years old. He's got a beer belly and he's just sitting there. He looks like he's like laughing hilariously. And they put the camera on Drake and everyone's cheering. And the guy looks over at the Drake and he goes, are you famous or something? And Drake was like, yeah, I'm kind of famous. and then like the meme actually found that guy's identity and he's significantly wealthier than Drake and he's like this big shot who no one knows and he owns some type of like boring business and it was pretty funny.

45:42By the way, that's one of the only cool things you can say to a celebrity. Like I've actually played this scenario out in my mind many times of like how do you, if you actually see someone really famous, like if you avoid it, lame, no story. You go up to him, you ask for a picture, no way. just you know you walk you walk away with a picture and no dignity you annoyed them like what do you go tell them you're a big fan what do you what 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 uh then they just have a blank face like i'm a rapper they're like okay and they're like and you have to start justifying yourself like that would be great i just i want

46:22Sam Parr:to do that to drake dude six months ago i saw this guy in the street and he was a cool looking dude He was young. He looked around my age and he had this beautiful dog with him. And I was out to eat like on the street. Like we were at a sidewalk table and he was just standing there. It looked like he was waiting for his wife or something. And I walked over. I'm like, man, that's a beautiful dog. I had a dog that looked just like that. And I showed him photos of my dog. I showed him my tattoo. And I just learned. I hung out for 20 minutes. Yeah, I just moved here. I'm so like in New York City, this and that.

46:49Sam Parr:And I was like, cool. And these people were like staring at him. And I'm like, are you famous? What are you doing? And he goes, yeah, I just, I play for the Knicks. My name's Landry. And he told me his last name. What's his last name? Is it Sam? What is it? Shamit. Dude, I totally had the opening. Like, his wife came over. My wife was talking to his wife. We totally had the opening where I could have, like, exchanged. You didn't notice he's 6 '5"? No, I didn't. Everyone in New York is, like, good-looking and striking-looking. I just thought he was a dude. You didn't notice he looks like the original Jesus?

47:23Does he look like Jesus? I don't know, man. He didn't know. You should have been like, oh, it's Jesus. That's why everyone's staring. He didn't look like that. No, in real life. I'm surprised you didn't tell him, like, sorry, everyone's staring. I have a podcast. Sorry, do you use Twitter? No, I think it's because I'm on the mix.

47:40Sam Parr:No, I literally sat with him for 20 minutes talking about his dog. And, like, there was totally, by the way, some chemistry going on where we could have, like, you just moved here. I just moved here. You know, we should. Do you want to do this? He should have intertwined and you left it that way for a minute. And 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 and I'm like, Landry, what's good, dog? I had that moment. My brother-in-law has a great move. He pulls with famous people where if he sees them, he just like he saw Mike Tyson once and we were walking and he just goes up to him and he's, Mike, what's up, man?

48:18Good to see you. and he just daps them up and he just says, good to see you, like as if he's seen them before. And then they're like, who's this guy? Seems like he knows me. I must know him. So they just treat him really well and they just dap it up and they move on with their day. And I've seen him do this now four or five times. And I have to say, this is currently like the best move that I've seen anyone do with these people.

48:39Sam Parr:I use my kids now. I saw Tom Hanks recently at a pizza place and it was just me, my daughter and him at this pizza place. And I was like, I don't really want to like approach them, but like it's kind of the greatest guy ever. So I let my daughter walk. I saw which way he was walking. And I was like, Naomi, walk that way. And she walked and like intercepted it and like intercepted it. And he was like, oh, hey, little girl, how are you? And he started talking to her. And I was like, yeah, got it. And so I heard his voice and it was awesome. So I do that now. Yeah, use your child as bait. Yeah. Naturally, the thing to do.

49:14Back to who's famous on this list. I'm going to read you a name. I want you to tell me if you even know who this person is. Antonio Gracias.

49:24Sam Parr:He's like his buddy who like started a hedge fund. Yeah. So the second biggest shareholder of SpaceX is Antonio, who owns about 7 % of the company. He's the only one over the 5 % 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's biography a bunch, which is he had been like, I think post-business school, they started like buying like businesses that did manufacturing, but weren't being run well and like a meat packing business or stuff like that. And so he just got really good at like running and operating businesses that had manufacturing or production facilities.

50:01And so when Elon needed help with like early days of Tesla or early days of SpaceX, he would just bring Antonio into like, yo, can you help me figure out the bottlenecks and the production line and the factory and like how we should be doing things differently? And they kind of both like, he became his study buddy for ramping up production. And Antonio was always there to help. There's a story about how when Tesla was like on the brink, he loaned Elon like, I don't know, a million dollars or something like that. Personally, not for any equity, just like you need it, here you go. And so he's gonna make like$90 billion in this idea.

50:38Oh my God.

50:38Sam Parr:Which is incredible. There's also a guy, one time when I hosted a HustleCon dinner at your office, There was this guy named Steve who came.

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51:39Sam Parr:and back then i knew steve via my friend neville he owns this thing called or start help start this thing called gigafun have you heard of gigafun it's a it's a fun but started by two guys steve who is the i'm acquaintance luke is the other guy so luke is the one of the paypal founders i believe or uh founding team members and uh steve and luke got this thing going and And at the time, I don't know if they described it as this, but it was pretty much, it was called the Gigafon and it was just fund Elon. And this is me talking, not them. But they would say like, we're just going to raise money and invest in Elon.

52:18Sam Parr: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 want to read you an email. I have open right now a email from somebody who used to be at Founders Fund. And Gigafund spun out of Founders Fund. Luke was at Founders Fund and then he left to start Gigafund. So the email basically says, you know, one of the smartest and bravest things I ever saw someone do was when Luke was at 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.

53:07And that's it. Take all the money and put it into the Elon companies. And at the time, that seemed like, you know, kind of crazy because Elon was doing pretty crazy companies. And in addition, it also seemed not sophisticated, which I think is the underrated part of this. And actually the part that's more interesting to me. Like if you look back like the last 15 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. You didn't need to do anything. Like we all want to do advanced, complicated, smart, sophisticated sounding things.

53:45But in reality, if you just pick the right, you know, pick the right horse. And in some cases, like what I'm talking about with Google and Facebook and Amazon, these were obvious horses. These are not like, it was not a surprise to anyone in 2010 that those were going to be important companies over the next 15 years. And you just had to not do other shit. Famously, you know, Bill Gates selling his Microsoft stock. Bill Gates would be the wealthiest man in the world had he just not sold his Microsoft stock. Chamath laughed for Facebook, you know, started his own fund and then started doing SPACs and bought the Warriors.

54:19And he's done this and that and this and that and this and that. all he had to do was just hold his Facebook stock. When he was an employee, he would have done better than everything he's done since then. So we seek out sophistication. We seek out activity. But simplicity is actually, you know, a more powerful thing if you get it right. And so he was, this email basically says like, I remember when he said that. I remember what everybody was thinking. And I just remember being like...

54:42Sam Parr:Was it like a chain email? Like he announced that he was leaving and he sent it to like his buddies? No, no, no. This is somebody who was at Founders Fund just emailing me telling me about this. and um and so and i've it always kind of stuck with me and now when i'm looking at this filing and you see gigafund and luke luke no sag oh they're listed so they have a huge stake they have a huge stake got it i was i was never sure how big it actually got but i remember steve through a friend of a friend someone was telling me steve's story and he was like he had this company that was like doing really well but he kind of quit it to just do this and i'm like that that's it just that's all he does and i remember the same i had the same emotion i'm I'm like, but why would he, there's got to be more to it.

55:22Sam Parr:And obviously - Yeah, you can do that, but you should also do XYZ. It's like, no, actually you should not do XYZ in addition. You should just do the one thing. So I thought that was pretty funny. Steve Jervison is who I thought you were going to say. Do you know Steve Jervison? Yeah, I do. He started DFJ like a fun, now he's got his own fun, Future Ventures. I've met him once, really surprised, like just a really nice guy. He's like a wacky, like silly - Wacky, future, a true futurist. And if you go, I think a fun, interesting read is, go Google, if you're a true business nerd, go Google Steve Jervison and go look at his Flickr.

55:55That's right, Flickr, like the old photo sharing website. For some reason, he's like an amateur photographer. He loves to, like he would go and take pictures of the early rocket launches at SpaceX and shit like that. And like, you know, the first Bitcoin mining rig, he'll go take a picture and he's talking about Bitcoin back in 2012 and he's excited about Bitcoin. And he would basically take a photo, post it on Flickr and write like a mini caption that was essentially a blog post, but why he's really excited about a certain technology. I've actually learned a lot just by going and reading Steve's Flickr.

56:26I think there's very few true like futurists in the world and he's one of them. And he was one of the earliest investors at Tesla, earliest investors at SpaceX, never sold a single share, which is the other remarkable thing is to hold through all the ups.

56:41Sam Parr:His wife, Genevieve, was my boss at my first job ever. and so I knew Genevieve very well. He's cool, yeah. Yeah, and I'm friends with her on Facebook and so I've seen this whole thing and I see all these 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 see behind the scenes a little bit of that and so that's been kind of funny as well. Yeah, and I think one of the reasons on this podcast I try to be more optimistic and benefit of the dowdy with, I don't know, technology and future. Like, yeah, a lot of people get things wrong.

57:19Yeah. A lot of people build dumb stuff. Yeah. A lot of stuff doesn't work. That's pretty obvious. And I do that for two reasons. One is I have this phrase, which is like pessimists get to be right and optimists get to be rich. If you hang out in Silicon Valley long enough, you realize that pessimism is a losing strategy. Um, when you're around innovation and technology, it pays to be an optimist. That's the first thing. The second thing is, um, I had a friend recently who, uh, you know, had a family member who was dealing with like health issues and had had that like, you know, health issues for decades.

57:47And this kind of like, it was resolved to like, I have to live with this. And then on our podcast, we've talked about that guy from GitLab 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, 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, Like, hey, I've been talking to Claude and I got some ideas. We could try this. And if I get this data, I can feed it to here and I can do this. And what I told them, I was like, you know, it's not that, oh, there are different types of people.

58:22They resist it and 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 Bannister four minute mile type of thing. Once you hear that somebody cured their own cancer with AI, guess what? You're going to approach a loved one with cancer very differently than you would have if you had just not heard that that was possible. And one of the great things about hopefully listening to this podcast, but also just generally being around ambitious, interesting, innovative people is that you get that normalization of what's not normal.

58:54You get to hear, you get your frame broken enough where you will, in your own situations of life, approach it slightly differently. And, you know, because I think part of this is like, you know, it's just Elon glazing and it's SpaceX glazing. But like another part of it is like, Like, damn, this dude literally called his shot 20 years ago. Self-taught, learned how to build rockets and recruit this team. It did what was pretty much impossible. And then today is the biggest tech IPO in history. You have to respect that and also forget about how good it is for them, but let it break your frame a little bit so that in your life, when an opportunity strike or an idea comes, you don't count yourself out.

59:35You don't miss that opportunity. You don't ignore what's in front of you and you actually take action.

59:40Sam Parr:One of my biggest takeaways of living in Silicon Valley for 10 years was to use the word mostly and almost more often than not. And what I mean by that is I used to say things like that will never happen or that cannot happen or that's impossible. And then I then I started changing this to where I see something I think is unlikely. I almost always try to say it almost never works, but sometimes it does. Or like, you know, 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 too black and white of like, if A, then B, you know, if someone has this idea, it cannot work or this cannot happen.

1:00:22Sam Parr:And you have to train yourself to always think in like, not absolutes, but like the The odds are this, but those are still like odds that like if enough people try, it could work. Well, speaking of the impossible, one thing I wanted to bring up was his pay package. I didn't know this until I was digging in. So I thought it was kind of new learning. So you remember at Tesla when he had that like crazy, Elon had that crazy pay package idea. And he was like, yeah, like if we become, you know, the world's most valuable car company by far, if we get to like, you know, 500 billion in value and we're delivering this many cars and we do this and we do this.

1:01:00Then I get this like huge pay package. And if I don't, I get nothing. I've worked for free.

1:01:06Sam Parr:And it's like laughable when they sign it. They're like, yeah, dude, whatever. You do that. And then it happens and people freak out over it. Exactly. There's a compilation of people of mocking it, laughing, being like, this is ridiculous, never going to happen, blah, blah, blah. So ludicrous, but you know, whatever. And then it happens and he gets the money. And then a dude with eight shares just sues him in Delaware and says, no, that wasn't, that shouldn't have been approved. That's too generous. And it's like, dude, it was seen as impossible before. And he got stripped of the pay package and then blah, blah, blah.

1:01:37He ended up getting revoted in, reinstated.

1:01:41Sam Parr:The plaintiff was like, nah. That was basically the argument. It's insane. Have you seen what his pay package is here? 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 1 billion shares in SpaceX. How much, how many points is that? So it's going public at$135. So that'd be$135 billion at today's value. But obviously if he did all this stuff, it would be worth a lot more than today's value. It would be, their total grants are like$750 billion. That's his like hypothetical comp if he hits all these things. But now listen to what he's going to hit.

1:02:25Two things are required. One, the market cap has to grow to$7.5 trillion, which would be the most valuable company ever. And two, a permanent self-sustaining colony on Mars of at least 1 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 300 million shares, so a third of that. This is kind of 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 6.5 trillion in value. And he's delivering 100 terawatts of compute per year from non-Earth data centers.

1:03:10So he does the space data center thing and delivers 100 terawatts of compute per year. Now you might be wondering, 100 terawatts, I don't really know how to put that in perspective. Guess how much? So he's trying to, he gets it if he does 100. I guess how much the total kind of current U.S. terawatt production is.

1:03:28Sam Parr:I don't even know what a terawatt is. So we're talking like a unit. You said 750. Is that what you said? He wants, if he does 100, he gets the award. 100. What is that relative to all of the U.S.? So he gets money at 100. What's the current U.S. at? I don't know. Take a guess. 50. So that would be like if he doubled the U.S. total electric grid, that'd be pretty crazy, right? It's currently one terawatt. So we'd have to 100x the entire U.S. grid just to get this award. In space? From space data centers, yes. From something that doesn't even exist and people don't even believe is possible. So yeah.

1:04:06Huh. Goals. Yeah. Set big goals, I guess. It's hard to reply to that. And if he does that, by the way, his base salary on the way is zero. I mean, he owns, obviously, a huge percentage of the company anyways, but like this is the additional grant he gets for continuing to work in the company. This is crazy, man.

1:04:24Sam Parr:It goes back to the fact like the biggest risk is that he dies. The biggest risk is that he dies. The biggest risk is that he dies. Like the biggest risk is that he doesn't have like if I'm a shareholder, I'm like you must have a dietician. 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 coke you do. It's the wildness that creates the fighter. You know what I mean? And if you put him on that, you know, sleep at 8 p.m. schedule, he's not Jon Jones anymore. Dude, I talked to a person who trains professional athletes and he was like, it's so funny.

1:04:59Sam Parr:I used to train these baseball players and the ones that were the most eager and did exactly what I said and came to me all the time and said, give me more. I want more. I want to do this. They almost always were never as good as the guys who were like eating M &Ms or doing skid, like eating skid, eating poorly and like going to bed at late because they played video games all night and they just show up and like he was like one guy made like a game-winning uh shot and afterwards i was like so excited i ran up and high five him he's like what are you doing man he's like you did the shot he's like oh whatever dude who cares and he like kept walking he's like the guys who cared you know treat them mean keep them keen the guys who cared the least amount and like tried not exactly tried but like put brain space on like the effort or the best and maybe that's what's happening here you know the the the weirder that things are the better that he's going to perform yeah which is which is but i mean how crazy is it that when we hear this stuff it's like uh like can he make starship work can you make an orbital data center work it's like we think the higher risk is just that he dies it's like in the probabilities game we're like i don't know the bigger risk seems like that it's just it's you've learned so many times in a row that it's it's not wise to bet against.

1:06:08Sam Parr:So I don't think that, like, I'm a dumb idiot and we should preface this before this episode, don't listen to anything. But the one thing that is true is that he's a challenging person to bet against. And so all these science fiction-y things, I think that he's bad at timelines, but I think he's good at doing it eventually. Mm-hmm. Okay. Well, the Glaze Fest is over. If 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.

1:06:47It's like, you know, that percentage of the population that they taste. What is it like the thing? Cilantro. Cilantro. And it tastes like bleach to them, like genetically. This might have been the cilantro for some people. And I'm sorry if it was. All right. That's it. That's the pod. I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off. On the road, let's travel, never looking back. All right, let's take a quick break to talk about a podcast, because if you're listening to this, you like podcasts. And what's better than one podcast? Another podcast.

1:07:21And 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 &A sessions with successful business leaders or hearing keynote 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 podcasts.