Elon Musk Dominates Outer Space Like Nobody Has Before

26:04I was looking at that. They called it like the ride share program or something. Yeah, the SpaceX ride share. Well, just one last thing on the price. And then, you know, there are tons now of these small rocket companies that have emerged. So like with Rocket Lab, you don't get the giant rocket of SpaceX, but you can get an entire rocket for about$8 million in some whatever you like to space. So it's like, this is what has opened up the opportunity for all these satellite startups. We got to check the CPI index for satellite rocketry and see the disinflation happening there. I just have one last question, and you already did sort of hit on it.

26:39But the national security element, and I'm curious about it both in the U.S. and maybe China and Europe, like it is pretty wild that, you know, in a war, a lot may depend on the whims of one individual Elon Musk and whether, you know, it's his company. He can do whatever he wants in theory, et cetera. But like, how are governments around the world thinking about the key man risk or the geopolitical risk? And this is it is an American company and et cetera. And the sort of, you know, the potential for, yeah, the fact that if he wants to turn it off for one country and not for another country, he can really impair or change the course of a war.

27:19Like, how are they thinking about this risk? Well, in the United States, I mean, we do have backup plans. You know, there is United Launch Alliance is always there with a rocket. They just, they haven't been able to do things like send humans to space. SpaceX has been the only one that can send humans to space since the shuttle stopped. But the US has been funding all these startups. Rocket Lab got some military funding. There's tons of these small rocket companies that have received funding from DARPA, etc. And so, so they're trying to put all these backup plans in place. China has a weird mix of government backed and private rocket companies.

27:51If you look elsewhere, the list gets much smaller. It's usually one government program and maybe a rocket startup. And so this is like a very expensive, hard to do thing. The US was in a pretty bad spot 20 years ago. The government programs had slowed down. The US is in an amazing spot now. We have more rocket startups and satellite startups than anywhere on earth by many, many times. Russia's space program is cratering. I think people should pay attention to this. SpaceX had already undermined their entire business. The war in Ukraine has cut off a lot of customers. They are the wild card in all this.

28:27Space is a point of national pride going back many decades. Corruption, plus their declining business, has eroded their space program. They've already done things like sent a missile up from the Earth to destroy one of their own satellites just to remind everybody that they have this capability. and so you know you'll also notice that the space force formed over the last few years and so so this is how people are thinking about this space is going to be an area of military combat almost definitely ashley vance that was so fantastic so great to have you on odd lots and uh i feel like i know a little bit more now thanks thanks for having me

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29:59That's public.com slash market. Paid for by Public Investing. All investing involves the risk of loss, including loss of principal. Brokered services for U.S.-listed registered securities, options, and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA, and SIPC. Crypto trading provided by XeroHash. Complete disclosures available at public.com slash disclosures. Introducing the all-new Adobe Acrobat Studio, now with AI-powered PDF spaces. Do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into five insights with a click?

30:32Do that with Acrobat. Need templates for a sales proposal that'll close that deal? Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time? Do that with the all-new Adobe Acrobat Studio. Learn more at adobe.com slash do that with Acrobat. That was our conversation with Ashley Vance. And now we're going to turn to two other of our Bloomberg colleagues, two of the hosts of the excellent Elon, Inc. podcast, which covers the sort of weekly or daily goings-on of Elon Musk and his universe. They're going to help us understand how SpaceX and Starlink fit more directly into the broader Elon Musk empire.

31:14We're going to be speaking with Dana Hall and Max Chafkin. So, Dana and Max, thank you so much for coming on OddLot. So, Dana, I'll start with you. How would you describe that specific role in the various assets that Elon has? What is SpaceX and, I guess, Starlink? Like, what does it serve together? Well, I guess I would say, first and foremost, that SpaceX is Elon's first love. I mean, this is the company that Elon founded after he made his millions from PayPal. And it's really the company that he began, first and foremost, before anything else. I mean, I feel like in the public perception, he's known as the CEO of Tesla because Tesla is publicly traded and it makes a consumer-facing product.

31:54But Tesla is the company that Musk invested in early on and then took over. But SpaceX is really the company that he founded. And it's really his first love. I mean, this guy's whole thing is about going to Mars and all the other aspects of his company are really sort of building towards that like a penultimate goal that has been his goal for like decades now. Just from a like logistics standpoint, also picking up what Dana's saying, like Elon Musk has long lived very close to SpaceX. Like it's been where he sort of located his person. And then he's flown, you know, a couple of days out of the week to Tesla and sort of managed that as like a side gig.

32:30And the other thing that Dana didn't mention that's probably pretty important is it's not just his first love. It's also kind of key to his brand. And like the way that he's managed to sort of create a lot of momentum in other businesses, I think, draws at least to some extent from the success he's had at SpaceX. Yes. Everyone knows that Teslas are, in fact, just Earth rockets. That was terrible. Max, I was going to ask you, you mentioned you mentioned time management there. This was going to be my next question. But when I think about Elon's empire, I can't even remember everything he has now.

33:02But obviously there's Tesla, there's SpaceX, there's the Boring Company. Is that it? and like Neuralink. Grok. Grok. X, X.AI. Yeah, Twitter. Where does he find time to tweet? That's the important thing. I mean, I think if you talk to shareholders, Tesla and even some of Elon Musk's friends, I think would say, you know, he's spending too much time tweeting. And I do think that one of the things that's been so difficult about this X acquisition, the acquisition of Twitter, renaming it X, and then Elon Musk's like increased engagement on X has been that it has like taken him away from these companies that are potentially more lucrative, more valuable, and also like more ultimately probably more important in sort of achieving the goals as Elon Musk has laid them out.

33:51Dana? Yeah, I was gonna say, I think he tweets a lot when he is on a plane or on the toilet, frankly. I mean, I think he's even said as much and he tweets a lot and he doesn't sleep very much. So, you know, he's when he's in between meetings or even if he's in a meeting, I think he's just sort of glued to that phone nonstop. I can't relate. Tracy immediately turns her head to me when you said that, but I can't relate to that. So keep going. You and Yvonne would have a lot to talk about, I feel like. Or we would just be distracted the entire time and not have a lot to talk about. Okay, wait, here's a serious question.

34:23Are there synergies between a company like SpaceX and say a Tesla or a boring company or Neuralink or something like that? I mean, Elon Musk would say, yeah, absolutely. I mean, first of all, like the general thing that he did with SpaceX, like if you go back to the beginning, is sort of take essentially like pre-existing technology that was more or less already out there and find ways to make it more efficient, cheaper, and to sell it in a super effective way. Originally to the government, of course, now to private enterprises. And I think in certain ways, Casey's followed that playbook with almost every company, except maybe arguably actually more than maybe with X.

35:06Yeah. And I think that like all of his companies still serve this larger purpose. So, for example, the Boring Company, which we think of as this like weird tuttling startup that's like building tunnels under Las Vegas. Like if he does like colonize Mars, you're going to need to build tunnels on Mars because there's not an atmosphere on Mars. So you have to like terraform the planet first. So like all of his companies have a role in like the bigger project, which is the Mars colony. And just in the way that, you know, he's using X to train the X.AI. And just the fact that so many investors and executives and people are all related to each other.

35:43It's like it's one big kind of massive Elon universe. And I can't think of any other executive who has run so many companies simultaneously. And he just keeps expanding. I mean, that's what's so that's what's so wild. Like you would think that SpaceX and Tesla would be enough. And now he's got six companies. So, Dana, just to be clear on this, when you talk about Mars and the vision is to get to Mars, like, should we take that literally like, oh, should we take it literally or seriously? Like, is it really like the way to understand the constellation of companies as a combined project that's a Mars project and we should take it literally that that's what the project is?

36:21I mean, that's how I take it. Yeah. Because I think that like, you know, OK, is does Tesla have a relationship to Mars? Not really. But like Musk's wealth is key. Like if you think about Musk needing wealth and the amount of money that will be needed to go to Mars, Tesla plays a role on that. You're going to need Internet service on Mars. You're going to need like if human beings are living on Mars, they're going to need to communicate somehow. So, yeah, I think of Mars as being the guiding principle behind a lot of what this guy does. And it does seem like fanciful and pie in the sky. But then you think about how many decisions he's made.

36:57It's all kind of with Mars still at the apex of like what is driving him. I mean, you can see, though, some of that starting to stretch. Right. I mean, like you don't need electric cars on Mars. I mean, you might need good batteries, I guess. I think it's like seriously, not literally. Like Elon Musk believes that it would be great if we had a Mars colony. And I think he does actually like with his own being want to visit Mars. And he's been able to use that as a sort of animating force behind this business that in a lot of ways has like nothing to do with. I mean, SpaceX has something to do with going to Mars in the sense that like, oh, well, eventually the rockets will get big enough and so on.

37:38But for many years, right, it had nothing to do with going to Mars. It was sending stuff to low Earth orbit. But he's been able to use that belief as like the kind of guiding light for SpaceX and amazingly for all of these other companies. Like he's he's people think of him as this amazing engineer, but he's also an amazing marketer, somebody who's really good at sort of turning something that can feel pretty pedestrian. Like, hey, right now, the Boring Company is digging a tunnel between like, you know, one end of the Las Vegas Convention Center and the Virgin Hotel, which is like very close.

38:08if you've been to Vegas, and coming up with a story that somehow spins that as like, this is all about our plan to colonize Mars, right? It's kind of like a Steve Jobs level exaggeration slash marketing. It's what makes him really successful, but it's also what, you know, brings on critics and short sellers and so on. Why hasn't he started an agriculture technology business? Because I feel like you're going to have to grow potatoes on Mars. That's one thing I've learned from Hollywood. And that could solve an Earth problem too, right? Well, Kimball, his brother Kimball kind of does that, right?

38:39I mean, Kimball is like the chef who's got this kitchen communities and he's growing organic food and teaching kids how to like cook and he's got restaurants. I sort of feel like Kimball plays that role. I mean, the most extreme version of this kind of like weird flight of fancy thing that is the woke mind virus, right? Where when he took over Twitter from the outside, you're looking at this, you're like, OK, this is the guy who really likes this social media app. He really likes posting on it. He also has amazing access to great investors. He's got some ideas. And after buying it, you know, or I guess in the process of buying it, he sort of concocted this idea that Twitter would be the key to saving civilization from collapse.

39:20Like, because if the woke mind virus, as Elon Musk describes it, were to take over, then our Martian colony would be irrelevant because we'd all society would collapse. So I don't know. It's like he's he's got an endless capacity to, like, stitch these new companies into that preexisting narrative. Wait, Max, you said something I want to follow up on. People think of Elon as a great engineer. Is he a great engineer or is he a great product manager, product dev who has done an objectively phenomenal job of bringing engineers together? I mean, there's no question he's built what he's built and SpaceX is SpaceX and et cetera.

39:55Is he himself considered to have great engineering jobs or is he just like a great like sort of manager type? If you ask Elon, right, he will insist he's a great engineer. In fact, he's like put it in his titles. You know, his like official title at SpaceX has long been like chief rocket designer. He like really embraces the idea that he is involved in the engineering for better or worse. You know, the Cybertruck, as recounted in the Walter Isaacson book, like the Cybertruck in a lot of ways seems like a miss. And one of the reasons is that Elon insisted on all these things. Now, is that engineering?

40:24Is that product management? Like, I mean, I don't know. I don't think he's as hands on as many people who work for him. Although I will say he's definitely like way more hands on than your average Silicon Valley CEO. And he prides himself on that. And, you know, for better or worse, that's that's who he is. So going back to SpaceX for a second, where does the money actually come from? Because this must be massively expensive. We got the sense from Ashley that, you know, clearly the business is exploding. But even with that revenue coming in, you're still talking about billions and billions of dollars of upfront investment for something like rocket technology.

41:00Who's funding that? Well, NASA, I mean, the company has sort of developed hand in glove with NASA, which very early on, you know, after the space shuttle program ended, NASA wanted commercial companies to kind of take the mantle and basically lead the charge in terms of privatizing space. And NASA sort of put out bids for private companies to kind of bid on the right to ferry not just cargo, but humans to the International Space Station. Two companies, one, SpaceX and Boeing. SpaceX beat Boeing by years. I mean, SpaceX has been bringing astronauts to and from the space station now for a while.

41:35Boeing has yet to fly. So NASA was a huge and very early kind of supporter of SpaceX. And then beyond NASA, like if you think of the launch market as like a three-legged stool, there's NASA, there's the U.S. military, and then there's like other satellite companies. So, I mean, the military is also huge. Like if you've got an NRO satellite going up there, you want it to go up on an American rocket. So Elon has a lot of defense contracts as well. Yeah, it's funny because you often hear stories that are like Elon Musk beat NASA, right, as if they're in competition. And in certain ways, I suppose that's true because SpaceX is a privately held company and it develops things in a somewhat different way than NASA has in the past.

42:18But you could tell a story about SpaceX where the hero is not Elon Musk. It's some like George W. Bush era administrator who had the sort of brilliant idea to give contracts to these private companies for what had become essentially a routine mission. Like we don't need to spend all this money on the shuttle. We should let the likes of Elon Musk do it. And it's to NASA's credit that they went for that, but also, of course, to Elon Musk's credit that he, you know, followed through on it and achieved it. Just on that note, do you get the sense that SpaceX is particularly adept at bidding for government contracts?

42:50Is it that they're like especially efficient at providing the best cost benefit? Or is it that they're the only ones that have this technology or the only ones able to do this at a certain scale? I mean, he's an amazing he's amazing at it. Dana, go ahead. Yeah, no, I mean, that's the other thing that's sort of a wild part of the backstory is SpaceX actually sued the Air Force for the right to compete on these national security missions. And everyone thought at the time, like, why would you sue the Air Force if you're trying to bid on these contracts? But they sued and they won. And then they started bidding and they absolutely win a lot of the bids because they are more cost effective.

43:25It's not a cost plus contract. It's just like, it's cheaper. And like the Air Force and the Pentagon love Elon Musk. I mean, whenever he speaks at any of their like military installations, he is like wildly applauded by all the folks there. And then in turn, like SpaceX has been very shrewd about hiring former military people to come work at SpaceX. So the whole revolving door thing, they have an incredible lobbying team in Washington, D.C. And so when SpaceX started, it was on the outside of the military industrial complex. And he very shrewdly kind of wormed his way into it. And now he is very much a part of it and like a big, big benefactor of it.

44:01We should also say, like, one thing that makes SpaceX kind of unique in Elon world is this woman, Gwen Shotwell, who is the COO and who has been the person who has sort of led this push to, like, sell these rockets to the military. As Dan and I talk about all the time on the podcast, and we've spent time with Gwen as well, like, they have a unique relationship. She is, like, uniquely able to manage Elon Musk to get kind of. Does that not exist at the other seven or eight companies, that sort of person who can manage him the same way? No, it doesn't. I don't think it exists at any of them. Yeah, because she's like the longest tenured person and she's the only person who's like the clear number two.

44:42Like Tesla doesn't have a clear number two. Whenever there's been someone who seemed like the number two, they either get fired or they quit. So she's got staying power and like this level of EQ that is sort of unparalleled at any of his other companies. Is SpaceX profitable? And well, can we get a sense? What are some of the numbers that we know about it? Revenue, profitability? Are we going to see an IPO? What are the years are we talking about? Give us a talk, talk business for a second. So probably not, but I don't think we totally know. And Elon Musk has sort of indicated in all sorts of ways that he's not going to take SpaceX public.

45:16What's sort of come out via reporting and like little dribs and drabs of what he said is that he'd very much like to take Starlink public, but that would leave SpaceX, the defense contractor, to continue to be his domain. That kind of makes sense because in theory, again, there are real challenges with the Starlink business that I'm not sure everyone totally appreciates, but in theory, that could be a very profitable business, lots of customers. It's easy to model out and so on. And in theory, it could be separate from SpaceX. The other thing is Starlink would create lots and lots of demand for SpaceX launches because Because if you're launching all these little satellites into space and you have to do it continuously because they fall out of the sky eventually, that's going to create lots of demand that SpaceX could use long run to keep the rocket program developing and eventually get to Mars.

46:02Yeah, I also think that Elon doesn't really like being a public company CEO. I mean, he tried to take Tesla private in 2018, was forced to basically go back on that idea and keep it public. But he kind of hates it. Like he hates the disclosures. He hates the rigmarole of earnings calls. He hates Delaware law. You know, like there's a lot more scrutiny on you when you are a publicly traded company. And so I kind of think going public is like a last resort for him. I mean, you go public when you are trying to raise money. But if you can raise money without it, I think he would prefer to stay private for as long as possible.

46:37I mean, there's also like a tension here because he doesn't want to go public. He hates the idea of giving up control is terrible. On the other hand, he's so good at dealing with Wall Street. And like, really, and I guess that's the line he's trying to walk with Starlink. You know, you're able to, like, break off this piece of the business that maybe he doesn't care that much about, which allows him to tap capital markets, get his investors some kind of return while also keeping his first love his own. Dana and Max, thank you so much for coming on OddLots. Really appreciate it. Great to be here.

47:05Thanks so much for having us.

47:18Tracy, I'm really glad we had those conversations because, well, I just wanted to understand more, but now I like more even fully appreciate what an extraordinary sort of, I guess, moment it is that one private individual has such a stranglehold, I guess, so to speak, on space right now. I'm kind of reusable rocket pills. Yeah. Oh, me too. Big time. Yeah. No, that was fascinating. There was so much to pick out of that conversation. One thing I thought was really interesting was when Ashley was talking about NASA and the sort of headline risk it felt around rockets and various space launches that ended up being a limiting factor in developing the technology.

47:56And we kind of see that time and time again with government projects. Right. So on the one hand, the government can be incredibly influential when it comes to, you know, promoting or designing new technology. But on the other hand, it can end up being very, very conservative because if something fails, it's a waste of taxpayer money and you got all these negative headlines. Totally. I had not thought about that at all, but it makes so much sense that like we just come to think about like we know what a rocket is, right? It's this extremely expensive one time thing. It has to be so reliable that we can put human life in it.

48:31And, you know, that was the whole purpose. And, you know, Ashley talked about this sort of the rocket as this sort of representation of a nation's scientific achievements, particularly during the Cold War. But that doesn't necessarily lend itself to great commercial operations because it's so expensive. And then you can sort of understand how a company can say, like, wait, maybe we can rethink this. Yeah. The other thing I would say is it feels like a lot of this kind of happened in the background, like the slow growth of SpaceX and Elon's empire and the dominance of things like Starlink. But now with Ukraine and Russia and various other things, it's kind of bursting into the public consciousness.

49:11And I wonder if there's going to be more awareness, let's say, of that dominance. Yeah. And I just don't see how any government anywhere could not be incredibly anxious about that. I mean, it seems to be the advantage of the U.S. government that it is an American company that is so dominant, etc. But obviously, Elon is Elon. And so I don't know how much like any government wants to like sort of depend on that. And then for if you're China or if you're Japan or if you're Europe, SpaceX is not one of your companies. and I don't know it feels like the sort of national security implications everywhere I just imagine that militaries and space agencies around the world must be like setting off all kinds of alarm bells what did Dana say it's Elon's universe and we all literally live in it it literally is also like the idea like it really is about Mars is like I find to be like a really like fascinating idea that like you put all these things together boring tunnels batteries space internet satellite like the unifying idea here where does the flamethrower fit in you gotta how are you gonna fight the martians i mean isn't that obvious like the martians aren't gonna fight themselves you're gonna have to like the martians aren't gonna fight themselves you gotta you gotta bring the flamethrowers no that was kind of an eye-opening way i guess of making sense of what at first seems like a very disparate universe of companies so yeah i thought that was incredibly interesting and definitely going to be watching what SpaceX does next.

50:41Likewise. Shall we leave it there? Let's leave it there. And a big thank you to Ashley, Max, and Dana. And make sure you check out the Elon, Inc. podcast. You can find and subscribe to that in all the regular places. This has been another episode of the Odd Thoughts podcast. I'm Tracy Allaway. You can follow me at Tracy Allaway. And I'm Jill Weisenthal. You can follow me at The Stalwart. Follow Ashley Vance. He's at Ashley Vance. Follow Dana Hall. She's at Dana Hall. And follow Max Chafkin. He's at Chafkin. And follow our producers, Carmen Rodriguez at Carmen Armin, Dashiell Bennett at Dashbot, and Kale Brooks at Kale Brooks.

51:16And thank you to our special producer, Elon, Inc. producer, Magnus Henriksen, who used to be years ago, the Odd Lots producer. So reunited with Magnus. Thank you to our producer, Moses Andam. For more Odd Lots content, go to Bloomberg.com slash oddlots, where we have transcripts, a blog, and a newsletter. And you can chat about all of these topics 24-7 in the Discord, discord.gg slash oddlots. And if you enjoy Oddlots, if you like it when we talk about reusable rockets and satellites falling out of the air, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free.

51:55All you need to do is connect your Bloomberg account with Apple Podcasts. In order to do that, just find the Bloomberg channel on Apple Podcasts. Thanks for listening.

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