Search Engine - A Strange Voyage

Episode Date: June 25, 2026

This month, SpaceX had the largest IPO  in all of human history. In a mission to understand a bewildering moment, we trace the story of the stock market itself. From its very beginnings in the Netherlands, to its supersizing in America, through the prism of crypto and widespread speculation that has led to this moment with SpaceX. What happened? ⁠The World's First Stock Exchange⁠ by Lodewijk Petram⁠The Wisdom of Finance⁠ by Mihir Desai⁠Liftoff⁠ and ⁠Reentry⁠ by Eric Berger⁠⁠Sign up to be a premium subscriber!⁠

Welcome to search engine. I'm PJ Vote. This month, SpaceX, Elon Musk's rocket chip company, which also owns Starlink, his satellite internet company, and X.com and XAI went public. History made on Wall Street today, SpaceX going public, the biggest IPO ever launched. SpaceX stock blasted off in its debut, soaring more than 19% on the NASDAQ. At the closing bell, SpaceX is now worth over $2 trillion, turning SpaceX employees. into millionaires and its CEO into a trillionaire. The largest initial public offering in all of human history. The company raised over $85 billion.

And it's been driven in an unprecedented way by retail investors. I just bought 50 shares of SpaceX at $172 per share. And I'm never selling. Let's see what happens, babies. According to the New York Times, In the week after SpaceX first began selling to the public, retail investors have purchased a net of $370 million worth of stock. More at the time said than the net retail buying of Nvidia, Microsoft, Alphabet, Meta, and Amazon combined over the same period.

Today, SpaceX briefly became the fourth largest company in the world by market cap, surpassing Amazon and Microsoft. How do you begin to think about something like this? that the social forces that pushed GameStop, a store that sells physical copies of video games up the leaderboards, that those same forces are now aimed at something much larger. At Elon Musk's promise that the future of AI sits with him, with him using rocket ships to launch data centers into orbit.

What's actually going to happen? When the future confounds me, as it usually does, I look at the present. When the present confounds me, as it usually does, I look at the past. This week we were doing an extreme version of that. We're going to go all the way back. We're going to go back to the creation of the stock market, an accidental invention over 400 years ago.

We were going to understand how and why that happened, how a tool for funding sea voyages has evolved into something somewhat different today. And by the time we're done, the present will make a little more sense to you, the future will make a little more sense to you, and the Netherlands will make a little more sense to you. Strap in, buckle up, this week at search engine, We're time traveling. My name is Lodak Pethram.

I'm a historian and economist from the Netherlands. And why did you decide that you wanted to study the history of the stock market? Oh, that's interesting. So I was a student of economics here in Amsterdam. And then I told my thesis supervisor, this is many years ago, of course. I was also a student of history, early modern history. And he said, well, yeah, are you aware of the special situation that you're in the Netherlands? That there's so much financial history in the Netherlands in Amsterdam.

So I'm currently right in the center of Amsterdam. And when I look out the window here, I see what is called East India House in Amsterdam, which is the original headquarters of a company that was founded in the early 17th century, the Dutch East India Company, which from modern eyes was a really terrible company. I mean, it did so many hideous things in Asia. But back then, so more than 400 years ago, people in Amsterdam, they were really about making money. money, trading stuff from place A to place B, out competing, the English, the Spanish, the

Portuguese. People were still exploring the world. And as they were exploring the world, they were also trying to control the world. The Dutch at the time in a cutthroat competition with all these powers, fighting to win the spice race. Not space, spice. Spices, like Nutmeg, for instance, just extremely valuable back then. Historian Giles Milton in his book about this era, Nathaniel's Nutmeg, writes about how if you could get a ship to the Banda Islands, you could buy 10 pounds of nutmeg for less than an English penny. If you could get that ship back to Europe, you could sell the spice at a markup of something like 60,000 percent,

assuming your ship didn't wreck, assuming all your men didn't die. The risk of a failed voyage was that it could ruin the person who funded it. Lodwick explained to me that businesses, until the 1600s, were pretty much all funded either by one single person or a single person plus their family. That's how things had been, but because shipping was so expensive and risky, this had begun to change. In some Italian city-states, people were founding these shipping companies. You'd raise money from a lot of people, not just your family, to fund a boat voyage.

And this is working, but there's this funny inefficiency in the way they organize these companies, a limitation that people at the time cannot see. And that is that they founded these shipping companies always for the duration of just one expedition. So what they did was they founded a company, asked investors to invest some money, then they would buy a ship or have a fleet build somewhere, I don't know. They would send out those ships to a foreign destination.

And when they got back, they would liquidate the company again. And this was a way for them to quickly pay out the proceeds to the investors and just be done with everything. So every shipping company was dissolved at the end of every voyage. You buy shares, but it's shares in a project, not shares in an ongoing business, the way we'd understand that today. Which seems normal to everybody involved. Here's how that begins to change. In 1602, the Dutch government, which, remember, wants to beat its rivals in the trade wars, decides, what if instead of having all these little Dutch shipping companies competing with each other,

we just had one enormous one, the Dutch East India Company? They said, OK, we are going to find a company that's not just sending ships there once, but that's going to send ships there multiple times, and also build fortresses and wage war. And so that's when they went from the system of founding a company for just one expedition to one that would exist for a much longer period of time. The government gives this new shipping company a monopoly on trade essentially throughout Asia. It's going to be an enormous venture.

And it wants this new company to run multiple voyages, not just one, which raises a question. When will the investors get paid back? It is decided investors will be paid back after 21 years. Anybody in the Netherlands can buy a share of this new 21-year shipping company. And a couple decades later, they'll get their portion of all the money the Dutch East India company has made from its many voyeither. What is the very beginning of that look like? Like, who's allowed to put money into this? How are they finding people?

Like, what does an IPO look like hundreds and hundreds of years ago? Yeah, yeah. So what the Dutchy senior company did was they organized a public subscription to the initial capital of the company. There was no limits or restriction of any kind. So anyone could subscribe some money to the company. And when that actually happens in August, 1602, so there's this one month, August, when the subscription books were opened.

And that took place in Amsterdam and also in five other cities in the Netherlands. And what happened in Amsterdam, I always find a somewhat peculiar story is that because the Dutchie Senior Company was a newly founded company, it didn't have an office building yet. And there was also no investment bank involved in it. There were no investment banks back then. So one of the founding directors of the Dutchie Senior Company, he opened his house for this initial capital subscription, which came to be an IPO. So during this one month, people could pay a visit to his house. And I always imagine that you end up, I don't know, in the kitchen or maybe

in his living room, you know, and there must have been probably a large table there with the bookkeeper of the company sitting there and maybe one or two directors overseeing the whole process. And what would happen is you would say your name and state the amount that you wanted to invest in the company. There were also no limits. neither lower nor upper limits to the amount that you could subscribe. Famously, the very last entry in the book is of the maids of the bookkeeper who subscribed 50 guilders to the initial capital of the company. But there's also a couple of merchants who subscribed several tens of thousands of guilders,

which was really a huge amount of money back then to the companies. What did it felt to them like, I guess one of the things I'm trying to understand is like if this didn't exist before. Yeah. Like I don't have a faith that if I personally put money into the stock market, I'll make the money back, but I have a faith in the stock market as a thing that basically functions in a way where, you know, I didn't have faith in like cryptocurrency in 2021. The people who were putting their guilders into the Dutch East India company, would they have

felt like they were buying crypto? Would they have felt like they were giving a wealthy friend they trusted money for a business venture? Like, how much faith did they have in the enterprise they were creating us they were creating it? So they knew the persons who were involved in finally this new company. And I think that was very important. So all the founding directors, they have been well-known merchants, so people would know them because they were, you know, a well-known figure in Amsterdam, successful. They had all been involved in earlier companies that had sent ships to East Asia to trade spices, and many of those companies had been very successful and very profitable. So I guess people were laying their faith in those aspects,

right? So because of this personal touch and I think the sense that people were indeed giving their money to someone who they expected to do well with, that was very important. So across six cities in the Netherlands, the Dutch East India Company goes out and offers these shares. It raises what is at the time an unfathomable sum, the equivalent of, in today's US dollars, about 200 million bucks. The Dutch East India Company makes one final, fateful choice, which seems to have almost been an afterthought. Somebody reasons that 21 years is a long time for these shareholders to have their money locked up in a single investment. And since the company wants to make investing as attractive as possible, somebody makes up this rule.

If you're a shareholder and you don't want to wait all that time to get your money back, you can come back to the bookkeeper and just sell someone else to your share at any time. They put a tiny little clause in the official document. It was just a very simple line, by the way, which said something like any shares in this company can be transferred from one person to another. Oh. So that's where they accidentally invent stock trading. Yes. But they weren't like, they weren't imagining you don't think at that point, oh, this is going to create a market and speculation.

It was more there's going to be some people who are like, hey, I need some way to back my money out of this earlier because 21 years is a huge amount of time. So we'll just give this as an option. But they did not understand the feature would become kind of the whole game. No. I don't think so. So it's important to realize that no one ever sat down at a table and thought, I'm now going to invent the stock market.

It evolved, right? So people were trying to solve various questions, various issues, and along the way, they happened to invent the stock market. But this, I think, only when looking back after a century, maybe someone for the first time realized, oh, maybe we invented the stock market there. How much of human invention is just a lot of human invention? like this. Hugely consequential new tools we build,

not entirely understanding what they're even for yet. We're trying to solve one problem, and we build something that solves and creates so many more. These Dutch shareholders had founded an entirely new kind of market. A market for stocks.

They were not thinking about the 500 years of history they'd just enabled. They couldn't imagine us. They were thinking about their boats. What are people starting to do now they have these shares out there, like what are the people, I forgot that there's a word,

which is shareholders, what are the shareholders doing over these decades with their shares? Like, is there behavior with these shares starting to resemble modern stock market behavior? Like, what's happening? Yeah, so there's a few stages.

So after the IPO was done in 1602, first there was a couple of months of nothing, basically, because people had not actually paid up their investment when they went to this house of one of the founding directors, they had just written down their names and an amount of money that they wanted to invest in the company.

But only after a couple of months, the first installment of that money was called up, so only then people actually had to pay up the first bit of money. And interestingly, immediately after that moment, you see the first share transactions appeared. Lodwig says that very quickly this primitive Dutch stock market

starts to somewhat resemble ours. there's derivatives trading, including what they call forward transactions, which look a lot like our trading futures. The thing we do, where we don't simply just buy and sell shares in companies, we also make complicated bets about the future price of those shares as we have selling and buying insurance. That's already happening on a bridge in Amsterdam, a hundred years before the invention of the piano. But like, I guess what I don't understand is you had described how, if I wanted to buy or, transfer a share, I would have to go to the local office of the Dutch East India trading company, and they would have a big book, and I would say, like, I'm a PJ Vote, and I want to transfer this to, you know, Garrett Graham, and that would happen. Once they're entering into this quick

period of, honestly, like, modern-sounding financial innovation, I mean, they're not logging onto their e-trade accounts. How are you buying an option or whatever? Like, what's the rumor that happens? What's the place? Who's the person? That all happened on the exchange locations in Amsterdam. So if you've ever been to Amsterdam, you probably arrived in the city by train. So if you would nowadays exit Central Station, the very first thing you see in Amsterdam is a bridge, which is called New Bridge. And that is actually the location where in the early 17th century, it was the exchange location of Amsterdam. So there on the bridge, open air, is where merchants and other commercial people would come together on a daily basis

to hear the latest news, gossip a little bit. and do transactions. So it was very strongly trust-based. The persons who were entering into a forward transaction with each other, they had to trust each other because there was no down payment, there was no formal registration somewhere with a, I don't know, an exchange organization or a bank or you name it.

It was just this written contract that these two parties to the contract had both signed. So they really had to trust each other. And that was possible in Amsterdam in the early 17th century, because it was a very small place with a couple of hundred people, you know, actively involved in this kind of trade. And they all knew each other. They were each other's neighbors.

They lived in the same neighborhood. They were often married to each other's sisters or, you know, it was a tight-knit community. And that's what made this market work. I started to feel a little nostalgic hearing this, a market where everyone knew each other. I don't mean to be a bumpkin, but the complexity of our financial markets, and my understanding that when they collapse, so does society, my experience having lived through one of those crises

in 2008, I felt a pang of longing for Amsterdam in 1602. When the market was just a few hundred people you could actually know, selling pieces of something, a shipping company that was so comprehensible. Majoring in econ in college back then, what would it have been? A 40-minute class? Of course, Ludwig assured me my nostalgia was misplaced. Markets are always complex. There's always bad actors in them.

Just because some guys married to your sister, it doesn't mean he won't get the better of you in a trade. Sometimes trust was misplaced, right? The other party to a contract was actually dishonest, so a lot of nasty things also happen. That's, I think, what I'm trying to say. You're still getting bilked. It's just by your neighbor this time.

Yeah. The past wasn't. simpler, which is different. And of course, the Dutch stock market, which enabled the Dutch East India Company, would also enable the kinds of wrongdoing most people now associate with colonialism. That nutmeg they were looking for on the Banda Islands, they found it. They also killed or deported nearly all of the 15,000 people who had been living there when the Dutch ships first arrived on shore. The British East India Company, England's version of this enterprise, would make even more money and spill even more blood.

colonizing most of the Indian subcontinent, sparking a famine in Bengal that would kill around 10 million people. It's a long list. It's a long story. That, however, is a different story than the one we're here to tell today. We were here because we were trying to understand SpaceX, Elon Musk's company, which he founded with promises to colonize Mars. There are no indigenous people on Mars, as far as we know.

There are also no spices. But SpaceX did raise an unfathomable, sum of money using the same tool invented in the Netherlands 400 years ago, an IPO. Or maybe more accurately, SpaceX used an evolved version of that tool. Because, of course, our stock market would be both familiar and alien to a Dutch person wandering in from the 1600s. We're going to take a short break, and then we're going to try to understand that evolution, how we Americans adapted this tool we inherited, made it better, made it worse.

After these ads, we're going to be able to. hop in our DeLorean and set the clock a few hundred years forward, leave old Amsterdam for New Amsterdam. We will head to American shores. In 1653, early Dutch settlers on the southern tip of Manhattan build a big wall. The street that runs alongside that wall eventually takes its name, Wall Street, and later, a financial market will emerge there. The story of that market, the American stock market, is a long, complicated story. It can be told a lot of different ways. This week we're going to do the quickish one. You've got places to be.

So America starts actually by trading bonds before we trade stocks. After the revolution, all the individual American states are in debt because of the war. Alexander Hamilton, the wrapping treasury secretary, comes up with the idea that the federal government will take on that debt and issue bonds in exchange. Meaning Americans can buy a bond, knowing that the federal government will one day pay them back with interest. This creates our first speculative market. There's not a ton of rules.

We have to make them later when things begin to go wrong and people lose their shirts. Some Americans are buying and trading shares, mainly of banks and insurance companies, but it's not a huge part of the economy or a huge part of most people's lives. Things take off the first time in the 1830s because of the railroads. It's funny in a way our construction of the railroads. It's like a mega version of the Dutch and their ships. Building a railroad system in America is this hugely expensive. hugely risky project with enormous upside if it works.

And so the barons turn to the people and make the request every market ultimately relies on. Trust me? Many Americans do. It's not a project where everybody's investing. It's not like you're moving guy owning crypto. The people buying to the railroads are mostly already wealthy. Elites.

It works out very well for some of them. Terribly for others. Many railroad projects go busts. The investors get destroyed. There's also a ton of overbuilding. Three big financial crises. But we also get hundreds of thousands of miles of railroad track. The market providing this vision of the future, showing us what can be, will be, with enough capital deployed.

Fortunes are made. And some of what we think of when we use the word stock market is created too. Big banks like J.P. Morgan, financial newspapers. But again, if you're a normal middle-class person, you probably would not have been a part of this. Normal people, regular people, enter the stock market in the 1920s. In this 10-year run where it seems like the number will only ever go up, normal people borrow enormous amounts of money to buy stocks on margin because they're convinced they're on the cusp of what people are calling the new era,

a sweeping age of permanent prosperity enabled by technology. The number will never go down. RCA, the radio company, is that decades in 2020. Obviously, the number goes down, the Wall Street crash of 1929, the Great Depression, but that crisis will actually lead to a much better stock market. A much safer place to put your money, a market that can even fund more impressive ideas. To explain how that happened, I've enlisted someone much more qualified than myself. Meheur Thaisai, I'm a professor at Harvard Business School and Harvard Law School.

Mehir starts the story of our modern stock market right after that 1929 crash. It really begins with a set of securities laws that are passed in the 1930s that really enable us to kind of make sure that we can give money to people and make sure that they will do the right thing by us. We require two safeguards against a return of the evils of the old order. There must be a strict supervision of all banking and credits and investment. You're hearing, of course, FDR, American president, and frequent radio broadcaster. There must be an end.

to speculation with other people's money. And there must be provision for an adequate but sound currency. So when we create some institutions that protect those shareholders, like we started to do in the early part of the 20th century, that sets the foundation for allowing outside investors to feel like, okay, yeah, maybe this can work. This is the birth of the SEC, the Securities and Exchange Commission. This is how we get a stock market that is more trustworthy than we,

crypto or Cal sheet. But when the SEC is born in the 1930s, there are still way fewer people investing in the market than today. It's like a single-digit percentage of Americans. How does that begin to change? The first step is that after World War II, American unions successfully fight for lots of employers to begin funding employee retirement plans for the first time. A huge win for workers. It also means that American companies now need more money to fulfill of these obligations. So the post-war kind of settlement was what? You come and work at Packard Motors, and we will pay you. And as part of our union negotiations, you will get health care and you will get a retirement plan. And then what will happen is Packard will contribute to that retirement plan,

and you can rest assured that for as long as you live, I'll write you checks. And so then they would invest in stuff to make sure that they could make those payments to you. So like my grandfile, comes back from World War II. Yeah. He wouldn't have been checking the stock market every day. That's right. He would have had a retirement account through his work. Exactly right.

His work would have been responsible for making sure that he gets paid in retirement. So you're making an assumption that the company you work for will always exist. And that was problematic. And that broke down, right? Because Packard ended up going bankrupt and, like, we're on the hook for all this stuff. And there's an insurance bailout. And so people are like, well, maybe that's not right. So let's go a different way.

And that different way is we had a revolution. in the way pensions work in the United States, which is beginning in the early 1980s, we had a massive shift in this country from defined benefit plans to what's called defined contribution. So what does that mean? Just to explain a little more slowly,

the shift that happened here, in our grandparents era, a lot of people had worked for companies that for the first time offered retirement plans. The companies, not the workers, were responsible for funding these plans. And they did this by making very safe investments, often bonds,

so they could write retirees' checks when the time came. That was the defined benefit plan. Defined contribution, which we shifted to, that includes something like a 401k. And it's different in a very specific way. Now, not just the company, but also you, the employee, are contributing money directly into an investment account. And employees are now deciding directly where to invest their retirement money. And that is really fundamentally different in the way you think about the world. Now you're an investor. What happens when you retire. The company's gone. They wash their hands of you, but you have this like nest egg. Well, what the heck are you going to do with that nest egg? Now, you have to decide what to do with that

nest take. And you have to decide what to do with that nest take all the time while you were earning. And that would be like my dad. Like my dad is born in 1955. He's in the workforce in the 80s. Yeah. And at this point, the company where he works is not securing his future. They are supplementing his investments in the stock market. And my dad would be like the first person in the lineage of my family who would like have strong opinions about stocks. Exactly right. And, you know, and investments more generally. By the way, the whole thing that's happening all along here, PJ, just to be clear, is we're all getting richer, right? So I don't know the specifics of your family, but your father is probably earning more than your grandfather, and your grandfather is earning more than your great-grandfather. And so we're getting richer. So what does it mean when you get richer? Well, more and more of your income is going to be available for savings. Let me just say everyone in America keeps getting richer is not actually a story most people feel like they're living in. But Mehir is talking about a relatively long time scale.

150 years ago, many Americans were still living in a cash-poor farm economy. They weren't earning a steady wage and setting cash aside. They were mostly just consuming what they produced. In 1876, not only did you not own a dishwasher, a car, a phone, or a flush toilet, you also just wouldn't have had much money in the bank, probably. Americans then even adjusted for inflation, something like 10 times poorer. Most of us do not feel rich in a country where housing is so criminally expensive, but relative to the U of 1876, you are probably richer. You may even have some cash.

And if you do, you have to put it somewhere. From the 1980s on, you have more Americans putting their cash in the stock market. Through their retirement plans, through individual investing, this is where our savings for the future, in one form or another, start to go. That creates a huge pool of capital that can be used to fund American capitalism. And there's no question in my mind that a big part of the vibrancy of the American economy over the last 60 years is associated with that. With capital markets funding really interesting great stuff. That is fantastic. And those returns are being distributed in a broad way amongst the population of people who save.

So in Mehear's telling by the 1980s, the institutions of America largely started saving for the future by putting the, their money in the stock market. And he thinks that was mostly a good thing, where he starts to have more complicated feelings is towards what happened next. The beauty of a stock market is that you can accomplish more with strangers' money than you could on your own. The bigger that market gets, the more capital in it, the more society can achieve. The hazard is that as more strangers pour in, these strangers are increasingly making bets on

companies they don't understand led by people they don't know. And the question is whether the market remains logical. In the 90s and aughts, as more and more retail investors joined the market, the system mostly held. Individually, people may have made bad bets, but the logic of the market, with some exceptions, still made sense. But here believes not long after that, though, things began to change. Do you own any Bitcoin or Ethereum? The recent spike in the prices of the cryptocurrency has gotten everyone. saying that he will now accept payment and doge coins for certain Tesla merchandise.

Let's go! You know what I'm saying? I'm like, this is exactly what needs to happen. When crypto emerged in the 2010s thrived in the pandemic, it proved you could have a market where people made bets really just on attention itself, not on whether an asset had significant underlying value. And instead of crypto either being regulated away or peering out, what happened next was that the entire market just became more crypto-like. is now number one on the U.S. App Store this week. Coinbase came in at number two after its listing. You had apps like Robin Hood,

inviting everybody to buy stocks on margin from their phones. That app store dominance is seen as a little bit more evidence that investing is becoming a form of entertainment for a lot of people. You had the rise of meme stocks like GameStop in the 2020s. It's been two years since GameStop shares started going parabolic, spurred by retail traders, trialing into the stock. Anything tied to a meme, whether it's Doge, Biggie, Bitcoin or GameStop is getting a lot of attention from retail investors.

If you believe our stock market has somehow been broken, Mejir thinks around here is where it happened. We enabled a world of attention gamblers, competing over who could make the wildest promises, not on who could fulfill them. We've remade our market, says no longer just a place where we bet on which company will succeed. It's also a place where we bet on the future flows of internet attention.

Not a gamble on a ship voyage. A gamble that tomorrow, more people online will say the phrase ship voyage. Let me try a metaphor out on you that I really like. So we usually think about financial markets as mirrors or lamps. Meaning two things. What is a financial market? It's a mirror. It's reflecting your value to you.

And that's really important because I'm going to pay you on that basis. I'm going to tell you what you're worth. Massively important for capitalism to have a good mirror. It's also a lamp. What is a lamp? projects light into the future. So what do financial markets do? They value everything

and they tell you what things are going to be doing in the future or they guess. That lamp is really important because when something goes up and value a lot, you say, oh my God, I want to go do some of that because financial markets are telling me that it's valuable. That lamp is hugely important for capitalism. Okay, so it's a mirror and a lamp.

I think financial markets have become a prism. And what is a prism? So a prism is something that somebody holds up and it refracts light. and it distorts reality. And what my concern is, now we have figured out, a subset of people have figured out, that we can use financial markets

to manufacture wealth, redistribute wealth, in all kinds of interesting ways. And that prism is not a mirror and an anal lamp. It's something completely different, and it's really problematic. And that, I think, is what the last 20 years have been about. Because people started to believe things that nobody should believe. And then I think entrepreneurs started to feel

like, oh, wow, I know how to play this game. The bigger the promise, the more extravagant than the thing I say, the cheaper the capital. And that is screwy. When we hear it to Sai looks at the American stock market of 26, what he sees is a tool that's been somewhat mangled, designed originally to allow humans to make bets on large enterprises larger than one person or one family could afford. Super-sized, like most things are in America. And in the long, last two decades bent into a shape where it's no longer as reliable as an instrument. And SpaceX, this specific company, this specific IPO, is a good way to understand that shift. We're going to take one last short break. When we come back, the story of SpaceX, founded in an earlier

version of our stock market by an earlier version of Elon Musk, how it started, how it changed. That's after these ads. Welcome back to the show. So we have heard the story, the invention of the stock market. We've heard Mechir Decide's theory for how it evolved, from something reasonably sane to something perhaps less reasonably sane. The last story I wanted to learn was about SpaceX itself. Not a company I'd ever paid too much attention to before this year,

before what is now the biggest IPO in history. In a sense, the biggest bet the stock market has ever made. So here's where I would start the story of SpaceX. One day in 2007, a not-eastern, yet famous computer nerd was being interviewed on a soon-to-be-cancled PBS show called Wired Science. Thank you so much for being with us here at Wired Science. Well, thank you for having me. Elon Musk. He's young here, much less flashy.

Dressed in a dark blazer, blue dress shirt, wearing a comically wide beige tie. Here is to share the story of his success so far. Two days into your physics program at Stanford University, you quit school to start a company called Zip to a media company. Right. which you sold a few years later for a paltry $307 million. Then four years later, eBay buys PayPal. Is that correct? A company that you established or helped to establish is one of the creators?

I co-founder with a few others, yeah. And now you've taken those two enormous successes, and you've set your ambition on space. How did you go from online payment systems to building a spaceship, essentially? Well, when I graduated from college, there were three areas that I thought would be most important. compatible to the future of humanity. The three were the internet, space exploration,

and then changing the economy from a mine and burn, hydrocarbon-based economy to one which is solar electric, which I think is... Even back then, he talked a big game, but he was not trying to get involved in politics. He was sort of staying in the lanes of being this tech visionary speaking about building things for the betterment of humanity.

This is reporter Eric Berger, senior space editor, which is a fantastic job title, and Ars Technica. He's also written two books on SpaceX. He's been covering the company for over a decade. Why did you first start paying attention to the story of SpaceX so long ago? They started doing really interesting things,

and I think this was against a backdrop of me becoming really frustrated with what NASA was doing. What was your beef with NASA? So I live in Houston, literally a couple of miles from Johnson Space Center. There's astronauts who live on my street. So I love the space agency, but they just, they weren't going anywhere. They were spinning their wheels, and it was increasingly clear that the agency was set up by Congress in particular to serve contracts to large defense companies, and they would slowly do things, but we were not going back to the moon or going to Mars in my lifetime.

If you were one of the kids who grew up watching NASA land humans on the moon on TV, what you might have thought is that you were in the first chapter of a story of galactic manifest destiny. that humankind was beginning its final great voyage to the stars. That's not what happened. And some of these kids, as adults, felt cheated, including Elon Musk. You have said that we got lost along the way with our space program. What did you mean by that? He's asked about this in that interview. What I mean by that is, in 1969, we were able to go to the moon.

And here we are over three decades later, and we can barely get to low Earth orbit. And I think by any measure, that is a step backwards. Must believe that the NASA of his youth had been replaced by something else. It started in the 1980s when NASA, after some high-profile disasters, found itself being grilled by Congress. Today, the House Science and Technology Committee begins an intensive series of congressional hearings into the causes and the ramifications of a great national tragedy. Last week, the Columbia Accident Investigation Board released its report on the causes of the space shuttle accident that occurred seven months ago, and today the committee will begin a thorough examination of its conclusions. Afterwards, in Musk's view, the agency had just become too risk-averse.

Eric Berger agrees. NASA really can't afford to fail in the public eye because the administrator and the whole agency is called out on the carpet. And in industry as well, the companies that worked for NASA, the contractors, kind of had the same mentality. Like, they could not fail. They were worried about losing their NASA contracts. And Elon sort of changed that up and said, you know what?

This is really hard. We're going to blow stuff up. We're going to make mistakes. But we're not going to let that slow us down. We're going to use that to go faster. You said in your endeavor here to explore space that we are committed to failing in a new way, if nothing else. What did you mean by that?

Just how it sounds? Well, I mean, we're committed to succeed, really. But if we do fail, I would hope that we at least add to the body of knowledge such that those who follow may make few mistakes. I know this might sound like fake humility. But Musk probably understood that the odds were very much against him. Private rocket companies are a place other people, more successful, more experienced than him, had already failed. Notoriously, an industry that turns billionaires into millionaires.

And Musk is spending what is at the time his limited fortune on this very quixotic endeavor. I told the team, I'd have enough money for three flights, and then that would be it. You know, curtains if we didn't make it in three flights. There's a documentary called Return to Space that chronicles these early days at SpaceX when it seemed so clearly a folly. This former PayPal guy, wasting his payout, blowing up dozens of rocket engines

in early pressure tests. Even once the company finally settled on its own proper rocket design, the Falcon 1 in 2006, that rocket failed at launch after launch. We have a lot of signal there. Here's Eric Burger. They tried three times, and it failed each time,

and the company almost went under as a result of that. You know, if NASA brought out a rocket and it failed one time and two times, the program was shut down, right? SpaceX was about to run out of Elon Musk's money. And without a successful launch, the company wouldn't attract anybody else's. The third rocket fails, and Elon basically says,

you know, we need to launch the next one in six weeks, which in launch terms is super fast. So instead of shipping the fourth rocket, out there on a barge like you would normally do, to save time, they get a C-17 from the U.S. military, they rent it, and they put the first stage, which looks like a large ballistic missile, into the cargo container area of the C-17. And they're launching from Quadrille, which is a small atoll in the Pacific. Basically, you fly from L.A. to Hawaii and then fly again from Hawaii further into the Pacific to get there. And so the first leg of the journey, they're descending into

Hawaii and all of a sudden the rocket starts imploding because the pressure differential hadn't been calculated correctly. Oh, God. And so, like, one of the engineers has to climb inside the rocket to open vents and the military pilots want to just say, hey, we need to dump it. We can't have this in the cargo area. Anyway, it was quite dramatic. They get to this tropical island, which looks not dissimilar to Gilligan's Island.

And they perform surgery on the rocket. Do all sorts of crazy things to fix it and test it. and they put it on the launch stand in September 28th, 2008. Five, four, three, two. We have left off. Oh, fuck. Musk, watching now helplessly as his final try takes off. He's too nervous to sit.

He stands, he mutters, he curses, he beseeches the monitor. You know, my baby, please tell me that it can stage lights. And it miraculously reaches. orbit. And that would be a nominal Seco, which means Falcon 1 is the first privately developed launch vehicle to reach Earth orbit from the ground. And they've become the first company to ever privately build a

vertical takeoff rocket like that and get to space. Musk and SpaceX, having survived a string of near-death encounters, enter a period of real success. The company starts to make money. NASA called and told us that we'd won a one-and-a-half billion dollar contract. And I could even hold the quote it. I just blurted out. I love you guys. NASA begins hiring SpaceX to bring cargo and later astronauts to the International Space Station. The first promise of SpaceX has been fulfilled. Of course, Musk has much greater ambitions,

which will require much more capital. This would have been a totally reasonable time for him to take the company public. Offer shares on the stock market, raise capital. Instead, Musk does something atypical. He says publicly that SpaceX's very long-term mission, travel to Mars, is incompatible with the stock market and its short-term thinking. So instead, he'll use a mix of revenue and private investor money to keep advancing. And in 2017, we see the next big leap forward for SpaceX. The company discovers how to drive down the cost of a rocket launch by fundamentally

redesigning the rocket itself. Before SpaceX, here's how every rocket launch worked. A rocket is basically one giant disposable engine, not like a plane which lands and flies again. With a rocket, you attach your payload, satellites or a capsule with astronauts, to the top of a skyscraper-sized booster. The payload would reach orbit and go to work, but the booster, the biggest, most expensive part, would fall back to Earth after launch and burn up. One launch and your rocket's gone. SpaceX invents reusable rockets. Rockets like in sci-fi movies.

A rocket that takes off, but then returns to Earth. I hate to betray my medium audio, but it's worth just looking up one of these launches online. 2-1-0. Ignition. And list-off. The site is something to see. A rocket ship takeoff, which you've seen a million times,

B-roll in your brain. But a rocket ship landing, I hadn't. Thrusters engage, these four feet, looking things deploy. Something that weighs about 25 tons lands gently on a very small landing pad. That was as smooth as I'd seen it. We had phenomenal shots all the way through the landing burned. Nobody'd ever done that before. Tonight, SpaceX makes history reusing the same rocket to send something into space. For the first time, it will reuse a rocket that's been to space and back again.

The mission could advance SpaceX's goal of bringing down launch costs and eventually... The reusable rockets do bring down launch costs. They drive them down wildly. From now on, if you want to put something big into outer space, SpaceX is the cheapest way to do it. The company describes it as what they're calling a ride-share mission. So this is kind of like the Uber of these satellite launches, I guess. That also enables a new, very profitable business Musk has launched,

Starlink, satellites beaming Internet to consumers from the sky. To a lot of people, it becomes indispensable. As Ukraine tries to drive back Russian forces, it has one big advantage in its effort. Starlink Internet satellites provided by the Elon Musk company SpaceX. Meanwhile, the rockets keep getting more efficient, more ambitious, more easily reusable. The lead SpaceX holds continues to widen. The mega rocket Elon Musk hopes will bring humans to Mars one day blasted off over South Texas skies Tuesday night. That's the story of SpaceX through 2025, a very important.

private company that against the odds picked up NASA's drop torch and drove human progress towards the stars. Professor Mihir Dissai believes that the stock market can be a mirror or a lamp, a tool to measure how valuable a company is today, how valuable it might be tomorrow. SpaceX, up until this month, was not publicly traded. But had it been, you could have bought it because you believed launching satellites is a good business today, or because you believed in Musk's claims about tomorrow, that tomorrow, he'd be running rocket ships to Mars. A mirror and a lamp. That's how you might have understood it until very recently,

when Elon Musk decided he wanted to compete in the AI race and started changing the way he talked about SpaceX. Elon Musk, since he founded the company years ago, has obviously become a much more complicated figure. He swallowed up Twitter, was swallowed up by it, used it to promote crypto, Tesla stock, fringe right-wing political ideas. He's also in that time developed a real mastery of attention in the internet,

an ability to persuade his followers into a kind of magical thinking, a cult of Musk, an ability he sometimes even uses to influence markets. And that power is maybe his best shot at competing in the AI race, a race that at first caught him flat-footed. He founded X-AI in 2023, well behind OpenAI and Anthropic. Musk doesn't have the most data centers or the best LLM, But the lever he could pull is to amass lots of capital.

And in February of this year, he makes a move. He takes his extremely unprofitable AI company, XAI, and stuffs it into SpaceX. X-A-I, All-Hands. We reached out to SpaceX for comment, didn't get a response, but this February, Elon Musk appeared at an All-Hands meeting at X-AI, speaking to his employees, but really addressing a larger audience, the public. the internet. This was broadcast online. He's here right after the

X-A-I and SpaceX merger to justify it, to paint a grand vision of the future that his new conglomerate is going to lead humanity toward. You have to go out there and you have to explore the universe to understand it. And that's the motivation behind the combination of SpaceX and X-AI.

It's to accelerate humanity's future in understanding the universe and extending the light of consciousness to the stars. I found this rhetoric not very illuminating, sci-fi slop, but I wanted to understand the real business case underneath it.

So I asked Eric Berger. What did you make in 2026 when SpaceX buys XAI? Like, was that a moment you paid attention to? And if so, what did it mean to you? You know, 20206 has been a really interesting year for SpaceX watchers because it has become increasingly clear

that SpaceX is not a space company. It's an AI company. So I think the acquisition of AI was part of the process of realizing that. You know, Musk started talking in 2025 about orbital data centers, and it became clear that he was predicating all of the company's future evaluation on providing data center services from space. Orbital data centers at the 100 to 200 gigawatt per year level,

not cumulative, I mean per year. Elon Musk has talked about this theory a lot. The data centers make more sense in space, where they can run on cheap, infinite solar. And he reiterates that dream in this all-hands meeting at his most hyperbolic scale. He says SpaceX plans to launch a terawatt of compute per year. What he's claiming is that every year

he'll create nine times more compute than our entire current global capacity. And all of it will be in space. Reporter, Eric Berger, pointed out to me why even the early parts of that plan would be very hard to work out in practice. because obviously it's a heck of a lot cheaper to build stuff here on Earth rather than having to build a very specialized piece of equipment

that's radiation hardened and has huge solar panels and launched into space. That's still super expensive. And so SpaceX is trying to make that trade with the Starship rocket and becoming very good at building satellites, but it's not at all clear whether they'll get there. But Musk promises they go even further. Beyond orbital data centers circling the Earth, beyond a mere terawatt per year.

But what if you want to go beyond a mere terawatt per year? In order to do that, you have to go to the moon. So by having factories on the moon, building AI satellites, and having a mass driver, which is the kind of thing you really need to learn about in, or read about in science fiction, but we're going to make it real. We're actually going to have a mass driver on the moon.

This entire all-hand meeting was so sci-fi that after I watched it, The next YouTube video to autoplay was, I swear, just the movie Contact. What I notice is how the version of Musk telling this far-out story is just so different from the Musk I encountered in that old PBS interview, way back when he was 35. It's not just that he looks synthetically younger than the less wealthy version of himself from decades before. It's that this version of Musk has also surgically removed from his personality the part of himself that could publicly admit weakness,

the possibility of failure. He's describing this improbable future like it's an inevitability in the staff meeting. Watching him speak, what I notice, it's not that he himself is that charismatic, he doesn't possess the magnetism of a great politician. It's that the audacity of his promises contains its own charisma.

You don't have to believe them. You just have to believe that other people might. That a promise this big cannot be constrained by the gravitational well of ordinary skepticism that normally reigns in public markets. Musk saying, look at the future I see. Look at the future through my prism.

Here's Professor Meher to sigh. Musk is the master of the prism. He is a reasonably good business person, but what Musk is massively good at is financial markets. I mean, he figured out financial markets in a way than no one else figured out financial markets. And SpaceX is the latest version of this. It is him using financial markets as a prism to manufacture, you know, even more wealth and power.

Now, that is, of course, all been enabled by our beliefs in the technology. Now, of course, look, I'm not denying AI is amazing. It's amazing. But is it being oversold in a remarkable way in order to enable this kind of cycle to continue? That's certainly my view. And that is the prism. What you're saying kind of, just to make sure I understand it, it's not that he is not a good businessman. Like, he has generally built things.

Yes. But the skill that drives it more than that is that he is good at story. He's good at story, and he's good at financial markets. He knows when to raise money. He knows how to raise money. He knows how to propagate a myth. And that's what's crazy about this era of magical thinking, which I thought would bust several years ago, is I think it'll die, but it dies hard. And it dies hard because lots of people, including now lots of retail investors, don't want it to.

die. And so I think it propagates. Will it die ultimately? Yeah, I think ultimately will die. When and how? Don't know. And if you try to kill it by shorting it or otherwise, you will get your face ripped off. Right. And that is not a pleasant thing to do. And so we have to wait. And that's kind of what we're waiting through. History made on Wall Street today, SpaceX going public, the biggest IPO ever launched. A game's favorite turn of the e-ears of SpaceX at 172 per share. Do you own any Bitcoin or Ethereum? The recent spike in the prices of the crypto. ...launch today, turning SpaceX employees into millionaires and its CEO into a trillionaire. So that's one view, that the SpaceX IPO in the end is the story of a catastrophically bad bet. the end part of a story about how a tool for measuring the future eventually became abused.

I know a lot of people who would agree with that version of the story. Me, I try not to make bets about the future into microphones. Never seems to go my way. Before we close the show, I wanted to go back to the place where I'm much more comfortable. The past. Lodvig, the historian whose office is not too far from the bridge in Amsterdam where all this started. The financial madness that's enabled so much human endeavor and folly. I'm just curious, like, for me, as a human being alive in 2026, the fact of the stock market just feels like the highway systems or telephones or even the ocean.

It just feels like a thing that always will exist, has to exist, like at least a necessary feature of functioning capitalism. Like, as someone who studied the stock market from its inception, do you see it as necessary or almost like historically contingent? Like, is it something that had to be as a force or could we have had this world without it? I think we may have had this world without it, but we would have then needed another kind of institution that performed a similar function as the stock exchange, right? So in the US, for example, the stock exchange has historically been much more important economically than in large parts of continental Europe, even in the Netherlands. Although the foundations of modern stock trading are here, especially the 20th century, the stock exchange was. hardly any important at all. It was mainly banks that financed the Dutch economy. But I think if there wouldn't have been a stock exchange or banks, then the world would have been very different

from what it is today. Maybe a better place, actually, a less money-driven, less individualist also world. But my take on that is that at some point in time, an institution like the stock exchange would have developed anyway. Just given the nature of man and given the entrepreneurial character of some people, right, people like Elon Musk, I guess, but also other people in history who have just not been satisfied with what was there before them and wanted to do new things and conquer new worlds and try out new ways of funding that activity. Lodwig Petram, his book is called The World's First Stock Exchange. We'll have links in the show notes to the books by our other guests, Eric Berger, and Professor Mihir Dissai.

This is our very last episode of the season, which means a lot to us and very little to you guys. What that actually translates to is we will be away for a month, where we will play some of our favorite episodes, both episodes of Search Engine you might have heard and some bonus episodes you might not have. And then we'll be back in August with some brand new stories for you. Thanks for being with us this season. Search Engine is a presentation of Odyssey, who's created by me, PJ Vote, and Truthie Pinnaminani. Garrett Graham is our senior producer.

Emily Maltaire is our associate producer. Our production intern is Piper Dumont. Theme, original composition, and mixing by Armand Bizararian. Additional production support from Kim Kupal, fact-checking this week by Natumi, Ajasaka. Our executive producer is Leah Reese Dennis.

Thanks to the rest of the team at Odyssey. Rob Miranda, Craig Cox, Eric Donnelly, Colin Gaynor, Moor Curran, Josephina Francis, Kirk Courtney, Vanessa Tencotti, and Hilary's chef. If you have a business and would like to advertise on our show, please email us, PJVote85 at gmail.com, subject line advertising.

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Your contributions there are what keep us running. Thank you. As always for listening, it's been a pleasure to make the show this season. We can't wait to see you again in August.