Odd Lots - Elon Musk Dominates Outer Space Like Nobody Has Before

Episode Date: June 12, 2024

The company that Elon Musk is most known for, obviously, is Tesla. It's been extraordinarily successful and made him one of the richest people in the world. But his true love may be SpaceX, the rocket company whose technology may one day be used in getting humans to Mars. But even if interplanetary trips are a long way off, there's no historical precedent for the sheer scale of the outer space dominance that Elon Musk has built out. Between his rockets and his satellite-based internet company Starlink, no one individual has ever completely dominated outer space this way. So where are these businesses going and how do they fit into the Elon empire? On this episode, we speak to three of our Bloomberg colleagues who have covered Musk and his businesses. First, we talk about the history and science of rockets with Bloomberg News reporter Ashlee Vance, the author of the book, When the Heavens Went on Sale: The Misfits and Geniuses Racing to Put Space Within Reach. Then we speak with Dana Hull and Max Chafkin, two of the hosts of Bloomberg's Elon Inc. podcast, about Musk's broader constellation of companies and how they all fit together.See omnystudio.com/listener for privacy information.

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Studios. Podcasts, Radio News. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthal. And I'm Tracy Allaway. We're very excited about this recording. It's a crossover episode with

Bloomberg's weekly Elon Inc. podcast. So we're all about Elon today. And to get into that, Tracy, do you remember our interview with the Ukraine Post CEO? Yes, I do. Igor Smolensky. That was a really interesting episode for a variety of reasons. One, because I just really enjoy talking about logistics. But secondly, one of the things that stood out to both of us, I think, from that conversation was when he was talking about how they're using Starlink in Ukraine. And also the idea that, you know, if they were ever to redesign the postal service from scratch, they would avoid traditional internet and just use all Starlink. No, that was like a very eye-opening moment for me. And I feel like when it comes to Elon Musk, obviously,

it feels like, I don't know, 40% of the attention on him is related to Tesla. Another 40% is Twitter or X. And then we're aware that there's like a bunch of all these other companies like Neurlink and Grock and SpaceX. But SpaceX and Starlink, that's a huge deal because my understanding or my sense is that like he is just dominating the skies. Yeah. And that's kind of the cool business as well, right? It seems like the cool business. Like rockets that can be reused if you ever see the satellite.

launching into the sky, the Starlink ones. They're really beautiful. Satellite internet is really interesting to me, partly because of when I was in Hong Kong. And you know they had the really strict COVID rules. And they would basically send you to a government facility that was extremely limited if you came down with COVID. You had to have satellite internet in there because there was no government internet. So you had to get a little box and bring it with you if you were spending like three or four weeks there. Wait, you didn't, you never had to go to one of those. I didn't, but I know a lot of people who did. And they had to get. And they had to get. And they. to bring their own box?

Yeah, because otherwise, there was either no internet or it was so poor that effectively there was no internet. I had not realized that element. But it is pretty wild, like, okay, here's one company and it just totally dominates satellite communication. I know it dominates rocket launches. And historically, space was the domain of governments, right? Space was the domain of the military of any government and or NASA or the NASA equivalent.

And now we're in this world where there's one individual. and basically one company that is just completely dominating space. And like I said, you know, I think people talk about Tesla and they talk about Twitter. But I feel like SpaceX deserves more attention. And I want to learn more about SpaceX. No, absolutely. This is something I hadn't really, I guess, internalized until recently. But the degree to which NASA basically opened up space to private companies is kind of remarkable compared to the way it was in the past.

So absolutely, I think this is something we should talk about. All right, so we've wanted to do a space slash SpaceX slash Starlink episode for a while to really understand this company and how it fits into the broader Elon Musk empire. So I'm very excited to say today we have a bunch of perfect guests. They are all our colleagues at Bloomberg. But first up, we are going to be speaking with Ashley Vance, who reports on all kinds of cool tech stuff for us here at Bloomberg. Sort of like the future cutting edge pieces. Every time Ashley writes an article is just about something. some crazy mad scientist, usually out in the Bay Area doing anything wild.

He's written a biography of Elon Musk. And his more recent book is called When the Heavens Went on Sale, The Misfits and Geniuses, Racing to Put Space Within Reach. So the perfect guest to talk space. So Ashley Vance, thank you so much for coming on Oddlops. Thank you for having me. I'm aware that SpaceX exists, that it's in the business of private rockets and satellites and all that stuff.

But, like, how big is SpaceX? or maybe how far ahead is SpaceX versus the competition? Well, yeah, quite far. You know, I always think of this as one of the most unlikely business stories there is. SpaceX started roughly 20 years ago. Nobody, you know, had really proven anything out as far as being a commercial rocket company or satellite company in a meaningful way. Before, it was all governments, a handful of governments that dominated this business.

And if you fast forward now, 20 years later, SpaceX, last year, for example, they put up about 50% of the world's rockets and probably close to around 80% of the world's satellites. So that's SpaceX versus the entire world. That's SpaceX versus China, Russia, India, et cetera. And if you look at this year so far, they've put up about 90% of the amount of stuff that's gone into space this year has been put up. by SpaceX. So they basically revived the United States space program. We'd fallen behind a number of countries. It looked like China was going to take this thing over, and now SpaceX is the clear winner of the space economy so far. I have a embarrassing question, but what's the difference between SpaceX and Starlink? Oh, that's a good one. Yeah, well, okay, so there's different pieces here.

Traditionally, most companies, you've sort of divided. Either you were a rocket company or you were a satellite company. SpaceX has become the dominant player in both, and Starlink fits in to that picture. So Starlink is a satellite communications service. SpaceX puts up thousands of satellites around the Earth. They're always surrounding the Earth. They're beaming down high-speed internet. And so it's really designed for places where, like, half the world today cannot be reached by fiber-optic cables because it's too hard or expensive to put them in the ground. So that's a lot of people. That's 4 billion people that cannot get high-speed internet today. And if you buy a SpaceX antenna, it's like a little basketball-sized thing, and you stick it at your house, you then pull down this high-speed internet delivered from space.

And so SpaceX is dominant in rockets, and it is really dominant in satellites. If I could give you one more data point, just to like put this in perspective. So from like 1950 until about 2020, all of the world, we had 2,500. satellites surrounding the Earth. That's what we've done in all those decades. From 2020 to today that we've gone from 2,500 satellites to about 12,000 surrounding the Earth. And the vast majority of those now are SpaceX satellites. That's why there's that huge jump. Wow. I feel like it dominates the night sky amateur like photography community as well. Do you ever see that online people talking about like what's this light in the sky? I can't figure

it out. And the answer is always Starlink. It's always Starlink launching new things. Well, I mean, it's funny. So, you know, when they do a Starlink launch, each rocket is filled with dozens and dozens of satellites. And yeah, it's just cool phenomenon. I mean, when they first come out of the rocket, they're all kind of clumped together. And then over the course of weeks, they sort of slowly spread out. And so now you can see that in the night sky. It used to be a pretty rare thing. But over the last two, three years, people see this now all the time. So I used to do a little bit of on-air reporting for Bloomberg rocketry, like when they would fire up some of those SpaceX trials and then the rocket would go up and then come down and like I'm still pretty blown away when I see those re-landings. Like it still doesn't seem like that should be physically possible. I know there are other competitors. You wrote a whole book about them. Jeff Bezos has one. Some of the people who used to work for SpaceX have launched their own. Sitting aside the numerical gap, what is the sort of technological gap right now between? spacex and how good it is with its reusable rockets and so forth and where the competition is

technologically. Yeah, I mean, that's pretty dramatic too. So there used to be, there was a handful of government programs that dominated space since the space race began. And none of the government players do reusable rockets at all. So nothing from Europe, nothing from Russia, India, Japan, any of that. And so you have to kind of turn to the commercial players that have popped up over the last 10, 15 years. And so SpaceX has this dialed in, as we all know. You know, they've reused one rocket, I think, as many as 20 times. And I wrote a biography on Elon, you know, that came out a few years ago when I was researching that book, all the traditional players said this was going to be impossible and it was a waste of time and the math would

never pencil out. But clearly, it has. After SpaceX, the second most successful rocket company is Rocket Lab. It was started in New Zealand. It's headquartered now. in the United States. So SpaceX has flown hundreds and hundreds of rockets. Rocket Labs flown about 50, and they have a much smaller, cheaper rocket, and they have started to move towards parts of reusable rocket, and they are building now a larger, fully reusable rocket that they're hoping to fly next year. So they really are the only current real rocket competitor to SpaceX, and they're doing very well. They're starting to launch once every couple of weeks. You know, the next step is the sort of last great hope to really challenge

SpaceX is Blue Origin, which has been sort of like a sad tale for, it was started almost the same year as SpaceX and really hasn't done that much. They do have a reusable rocket for the tourism flights where you go to space for about six minutes. Blue Origin has never sent a satellite up. It's just not been involved in sort of the commercial end of the business. This year, they think will be the first time they send up their much larger rocket that can take satellites. And Blue Origin is also focused on reusable rockets. Wait, I have another basic question, which is how do reusable rockets actually work? And why did SpaceX decide to go down that route? Because as you said, a lot of people thought

it was mathematically or physically impossible. Yeah, I mean, there was this thought that it was sort of a waste of time because the rockets, they go through so much damage and pressure and violence during a rocket launch that the idea of bringing this huge tube back and it's still being usable again that seemed a bit far-fetched and you have to deal with the whole process of actually getting that tube back instead of falling into the ocean or burning up in the atmosphere. And so, so SpaceX, you know, they develop this technique where they have these these landing legs actually on the big base part of the rocket and it comes back towards Earth and it's sort of free falling. And then all of a sudden the engines kick back on again and they slow it down and it just lands right

back on the pad where it took off from. There's a big trade-off in this. So the physics, nobody has a great advantage on the physics of rockets and the physics of rockets aren't that great. When you have this giant tube full of fuel, you know, it's a few percent of the total weight of that rocket is the stuff that you actually get to take to space. The vast majority of it, is fuel. And you have to use some of your fuel to land the rocket. And so people also thought that was a bad train off to make. It's better just to take more stuff. Didn't at one point some people thought that rockets themselves would be inherently impossible for that exact reason that just like so much of the weight would be the fuel? And so some people just theorized that the idea of

rocketry would be inherently impossible. Yeah, going way back, you know, the first rocket pioneers were sort of like in the 1910s and 20s, this guy Robert Goddard was the American pioneer in this field. And there's a pretty famous moment where he writes an op-ed for the New York Times talking about flying a rocket to the moon. And he was just pilloried as this wacko, you know, and that none of this would ever happen. And the physics don't make sense at all. And so it took a while to sort of get people to believe that. These days, the way the basically works is like the bigger you can make a rocket, you start to get these advantages.

And so that's kind of what you want to do. But the bigger you make a rocket, the more complicated it is, the more engines it needs. It gets harder and harder. And SpaceX is really the only one that has dialed all this in, has the manufacturing processes to make all this math work. If you look at the government programs, they don't really have an answer to what SpaceX is doing. And these things take 10, 20, 30 years to figure out. I'm June Grasso, inviting you to join me for the Bloomberg Law podcast. Every weekday, we help you make sense of the legal stories that shape the nation and the world.

Listen for complete analysis of the biggest court cases, the latest actions from Congress and regulators, and the legal moves driving the markets, from corporate law to constitutional law and from state courts to the Supreme Court. At Bloomberg Law, we go beyond the day's headlines. We speak with top attorneys, judges, scholars, and policy experts to break down what the rulings really mean. We do this every weekday, then bring you the best conversations in our daily podcast. Search for Bloomberg Law on YouTube, Apple, Spotify, or anywhere else you listen. On the East Coast, listen as you start your day, and on the West Coast, catch up in the evening. That's the Bloomberg Law podcast with me, June Grosso. Subscribe today wherever you get your podcasts.

How did we end up with a system where we have, you know, the government has a space program. NASA exists. And then we have these private companies who are doing or providing very important services for entities like NASA. It seems like a weird kind of pseudo government private commercial system that we ended up in. Yeah. I mean, if I could riff for a second, I've thought about this a lot. You know, there's an economist named Alex McDonald. He works for NASA. He wrote a really interesting book kind of on this topic. You know, we were talking about these rocket pioneers in the 1910s and 20s. The U.S. had Robert Goddard.

There was a similar figure in Germany and Russia, and they were all pursuing these kind of liquid-fueled rockets, very similar to what we use today. They were essentially startups. These were researchers who got private money. Back in the day, if you were really rich, the cool thing to do was to build a giant telescope. That's what rich guys used to put their money towards philanthropically, and they started to do that to rockets.

It was kind of like everyone was interested in space and wanted to prove this out. And so it looked like we were kind of heading on this commercial path. I think World War II spilling into the Cold War where space turned into this national sort of achievement, this point of pride, this way to show your scientific prowess. you know, it turned into a government effort. And the result of that was that the rockets could not fail. We got on this race, obviously, to send humans into space. And so you have to build very expensive, infallible rockets. And this is, it was sort of like history that pushed us there, but then we got stuck.

You know, literally, rockets really did not change from the 1960s until SpaceX came along. And so everybody got fixed. fixated that these rockets had to be huge, costly, expensive. They couldn't fail. It was embarrassing if they did. And that was the ethos. And so SpaceX came along. They were able to take more risk to make the rockets cheaper, to use modern technology, modern software. And so they changed that equation. And it's only now that we're in this weird world between government and commercial space. I think, you know, we are leaving that era of government space. And I wrote my hope, my new book was called When the Heavens went on sale, because I think this is completely becoming a

commercial enterprise now. That's so fascinating, this sort of like path dependency and right, like the sort of military over-engineered, it's about carrying people, it's about that triumphalism, and then the idea that, okay, that's what people think a rocket is, and then SpaceX comes along and just rethinks it from the ground up. It sounds like, I'm curious about the business. So, you know, Tracy and I had a conversation on Oddlaught several months ago, and we were actually talking to the guy who runs the Ukrainian Postal Service, and he was talking about how,

you know, thanks to Starlink specifically, if Ukraine were able to retake a village, they wouldn't rebuild the old internet infrastructure. They could get internet going in a day with satellite. And it's sort of like very jarring because you realize, you know, just what an incredible asset Elon is building up. And so between SpaceX and Starlink, I, you know, I know that like SpaceX will charge you or an individual if you want to like get some space on one of his rockets to fire up your own satellite. Obviously Starlink subscribers pay, I guess, presumably some monthly fee. But, you know, where is this going in terms of the monetization and business to have both the launching infrastructure and the satellite infrastructure together and what can be done

with so much physical material out in space owned by one company? Yeah. Well, look, I mean, this has been SpaceX's huge advantage. It has rivals trying to build this space internet. There's one web, which started as a sort of quasi-U.S. and European venture, it's gone through bankruptcy in many twist and turns, but it has tons of satellites, but it lacks rockets. And it was actually hoping to fly on a ton of Russian rockets. And when the Ukrainian war broke out, they don't have access to these Russian rockets anymore. And so they got sort of stock, and SpaceX was able to race ahead. Amazon is looking to build a giant constellation. Jeff clearly has a rocket company, but he doesn't have the rockets right now that can send all these satellites up.

And so SpaceX is in this unique position. There's tradeoffs, right? You can think of Star Lake, I think of it, as a, it's really like the first global internet slash communications provider. As we all know, telecoms tends to be a sort of nationalized thing. If you're in the U.S., you're on whatever AT&T or Verizon, when you go to Europe, you have to switch to something else. being in space, you get past all of that. And so you become this global force. And that is how they make their money is on these monthly subscriptions. I have Starlink at a house of Mexico. I think it's about $60 or $70 a month to get the service. And so you've got consumers paying for that. You've got

some businesses paying for that. And yeah, so there's this idea. Maybe you could avoid building a lot of infrastructure on the ground. There is a trade-off. Like space internet is almost definitely never going to be as fast as fiber. And so if you're, you know, if you're in a country like the United States where we have this huge landmass and we have the money to lay all this fiber, you know, that is still going to be the backbone that most people use. But in all these other circumstances, planes, cars, boats, also like this idea, this is what I think about the most is this unified fabric of the internet blanketing the earth so that no matter where you are, there's internet service, all of our modern devices are working, things like autonomous cars and drones and all the stuff that need to be connected all the time.

You know, I think SpaceX right now is in the pole position to be that sort of future backbone of all that. You said something interesting earlier. You said our last hope for competition to SpaceX was Blue Origin. That might have been dramatic, but they are the biggest hope, just because Jeff has so much money to actually. Right. Well, point taken, but I do get the sense that there is a desire to have more than one company that's doing this. And I guess my question is, why is that important? Because when I think of natural monopolies, like it's usually something pretty important, like infrastructure or rockets in this case.

Couldn't we have a world where one company is very, very good at building these and dominates? Like, what's the tradeoff here? Well, we do have a world like that at the moment. And, you know, we've already seen some tradeoffs. I think there's a bunch of reasons you would want multiple rocket companies, particularly if you're the United States or China or Russia. Clearly, for political, military, strategic reasons, you don't want to be dependent on one company. For all kinds of reasons, something could go wrong.

Their rocket could stop working. They could go out of business. You know, you want these other paths to space. We talked about how many satellites are going up. I mean, this is the next, I think of it as the, you know, we spent the last 30 years building out this internet infrastructure on Earth. We are now doing the exact same thing in space. It is going to be the next spot where we build out our computing infrastructure, and you want lots of access to that and ways to put these satellites up, replace them. And look, if we look at Ukraine, there's a pretty good case you could make that Ukraine would have fallen to Russia quite quickly without space.

In the early days of the war, all of these satellites were providing tons of imagery that aided the Ukrainian military. After that, SpaceX Starlink became this essential part of the Ukrainian military's infrastructure. It really undermined Russia's plans for attack. But we saw these situations where Elon can turn Starlink on and off at his whims. And so, you know, do you want one person with the power of a nation state when things like this happened, and do you want that one person to be someone as material as Elon? Probably not. You probably want a couple options in this race. And definitely nations like China,

Europe, Russia are going to want their own space internet and rockets. Yeah. I imagine that pricing is pretty low down on the priority list when it comes to rockets. But Joe, weren't you looking at the prices for some of these? Yeah, it was fun. I looked and see what the cost of putting a satellite into space. I was pretty annoyed because I thought I could get a 50-kilogram satellite into space for $690,000. But then I clicked to the next page and there was all this like fuel surcharge and all this stuff. Junk fees. Went up to like $1.5 million. So I was like I was not happy.

I felt like an Airbnb person. That's still pretty good though. You know, if you go back a few, if you go back a few years, you're, you basically have to pay $300 million and buy an entire rocket. Wow. Okay. All right. I'll book the 1.5 million. Wait, so prices happen coming down. Like dramatically. So there's a couple ways prices have gone down.

So SpaceX's major competitor in the United States is this company called United Launch Alliance. It's a combination of Boeing and Lockheed. And their going rate for a rocket launch is usually about $300 million. That's for the entire rocket. SpaceX charges about $60 million for the equivalent rocket. So already SpaceX pulled the price down. And then there's a new model that's emerged where you don't have to buy the, entire rocket because the satellites used to all be the size of a school bus and cost billions

of dollars and you wanted your own rocket. Now there's tiny satellites like the size of a shoebox. And so you buy space on a SpaceX rocket. I think that's what I was looking at. I was looking at that they called it like the ride share program. Right. 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're 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 rockets and see the disinflation happening there. I just have one last question, and you already did sort of hit on it, but 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. 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 war. Like, 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 U.S. 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,

et cetera. 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, if 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 U.S. was in a pretty bad spot 20 years ago. The government programs had slowed down. The U.S. 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 wildcard in all this. Space 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 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 Oddlods. And I feel like I know a little bit more now. Thanks. Thanks for having. A lot of short daily news podcasts focus on just one story. But right now, you probably need more. On Up First from NPR, we bring you three of the

world's top headlines every day in under 15 minutes because no one's story can capture all that's happening in this big, crazy world of ours on any given morning. Listen now to the Up First podcast from NPR. 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. We're going to be speaking with Dana Hall and Max Chaffkin. So Dan and Max, thank you so much for coming on Oddlod.

So Dan, I'll start with you. Like, 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. But 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 Dan is saying, like, Elon Musk has long lived very close to SpaceX. Like, it's been where he's sort of located his person. And then he's flown, you know, a couple days out of the week to Tesla and sort of manage that as like a side gig. And the other thing. thing that Dana didn't mention this is 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 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, but obviously there's Tesla, there's SpaceX, there's the boring company, is that it? And like Neurrelink. GROC. GROC. X, X. X.A. 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. Dana? Yeah, I was going to 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, 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 Ewan 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. Are there synergies? between a company like SpaceX and say a Tesla or a boring company or Neurlink 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 preexisting 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 he's followed that playbook with almost every company, except maybe arguably, actually more than maybe with X. Yeah, 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. And the fact that so many investors and executives and people are all related to each other, it'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 my, like, should we take that literally, like, oh, should we take it literally or seriously? Like, it's 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. I mean, that's how I take it. Yeah, because I think that, Like, you know, okay, 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. It'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 he 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.

But 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. He's like 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 if 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? I mean, Kimball is like the chef who's got this kitchen communities and he's growing organic food and teaching kids how to 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? When he took over Twitter, from the outside, you're looking at this. You're like, okay, 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. Like, 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 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 engine. 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. Is he himself considered to have great engineering jobs or is he just like a great like sort of manager type?

If he has Elon, right, he's going to, 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 cyber truck, as recounted in the Walter Isaacson book, like, the cyber truck, 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? Is that product management? Like, I mean, I don't know. I'm not, I don't think he's as hands-on as 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. 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. Who'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. Boeing 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 need, 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, as if they're in competition.

And in certain ways, I suppose that's true because SpaceX is a privately held company. It develops things in a somewhat different way than NASA has in the past. But 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.

Well, just on that note, do you get the sense that SpaceX is particularly adept at bidding for government contracts? Is 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 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.

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. It'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 of 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. We should also say, like, one thing that makes SpaceX kind of unique in Elon World is this woman, Gwen Shotwell, who is the C-O 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. Like Tesla doesn't have a clear number two. Whatever 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 than any of his other companies. Is SpaceX profitable? Can we get a sent? What are some of the numbers that we know about it? Revenue profitability. Are we going to see an IPO? What of 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. What'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 Starlink business that I'm not sure everyone totally appreciate. But in theory, that could be a very profitable business, lots of customers. It's like 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 like if you're launching all these little satellites in the space and you have to do it continuously because they fall in the sky eventually, that's going to create lots of demand that SpaceX could use like long run to keep the rocket program developing and, you know, eventually get to Mars. Yeah, I also think that Elon doesn't really like being a public company. I mean, he tried to take Tesla private in 2018, was forced to basically, you know, 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. for as long as possible. I mean, there's also attention 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. Danna and Max, thank you so much for coming on Odd Lots. Really appreciate it. Great to be here. Thanks so much for having us. Tracy, 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. And 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 could put human life in it. And, you know, that was the whole purpose. And, you know, Ashley talked about this sort of the rocket is 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. And 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, et cetera. 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 at militaries and space agencies around the world must be like sitting off all kinds of alarm bells.

What did Dana say it's Elon's universe and we all just 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 uniform. idea here. Where does the flamethrower fit in? How are you going to fight the Martians? I mean, isn't that obvious? Like,

the Martians aren't going to fight themselves. You're going to have to like, you know. The Martians aren't going to fight themselves. You got to bring the flamethrowers out. No, that was kind of an eye-opening way, I guess, of making sense of what it 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.

Likewise. 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 Alloway.

You can follow me at Tracy Alloway. And I'm Jill Wisenthall. 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 Chaffkin.

He's at Chaffin. And follow our producers, Carmen Rodriguez at Kermin Armin. Dashel Bennett at Dashbot and Kale Brooks at Kail Brooks. And thank you to our special producer, Elon Inc. producer, Magnus Henrickson, who used to be years ago, the Odd Lots producer. The Oddloss producer. So reunited with Magnus. Thank you to our producer, Moses Ondom.

For more Oddlots 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.g.g. slash odd lots. And if you enjoy odd lots, 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

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