Tech Won't Save Us - The SpaceX IPO Gives Elon Musk Even More Power w/ Sean O’Kane

Episode Date: June 4, 2026

SpaceX is finally going public, and it’s bad news for anyone who wants to rein in Elon Musk. Sean O’Kane joins Paris Marx to discuss the flimsy sci-fi ideas Elon Musk is using to justify the company’s massive valuation and the way corporate governance rules are shifting to give him even more power.Sean O’Kane is a senior reporter at TechCrunch.Tech Won’t Save Us offers a critical perspective on tech, its worldview, and wider society with the goal of inspiring people to demand better tech and a better world. Support the show on Patreon.The podcast is made in partnership with The Nation. Production is by Kyla Hewson.Also mentioned in this episode:Paris asked listeners to fill out a survey. It will only take a few minutes!Sean wrote about the SpaceX IPO and the worrying ways it will increase Elon Musk’s power.After recording, Sean also wrote about how SpaceX is getting a major boost from the Trump administration.SpaceX has made a deal with Anthropic.Musk has a poor environmental regulation record.OpenAI bought a tech podcast.Support the show

If these companies don't need as much compute as we think they think they do, and the data center build out stuff starts to slow, which there are signs that that's already happening, who needs data centers in space, right? Like, he can sell a lot of dreams to people. That one specifically, I do not think he will have much luck selling to public markets over, you know, especially if these other pieces of SpaceX start to fall apart. Hello and welcome to Tech Won't Save Us, made in partnership with the Nation magazine.

I'm your host, Paris Marks, and this week's guest, is Sean O'Kane. Sean is a senior reporter at TechCrunch. Before we get into the topic of this week's episode, I do have a quick request for you, though. It's been a long time since I've done a survey of the Tech Won't Save Us audience, and I figured now is probably a good time

to do a new one, to get some insights into what you would like to see more of from the show, maybe even less of, to kind of guide where the show goes from here, so I can hear a bit about what you are thinking, and that can go into informing my decisions and, you know, my thought process as to the kind of guests we have, you know, the goals of the show, all that kind of stuff. So if you have a few minutes to give me your insights and your thoughts,

there will be a link in the show notes where you can go fill that out. As I said, it won't take you more than a few minutes and I would really appreciate it. So with that said, let's get to this week's episode and the subject, which is, of course, the SpaceX IPO. As you will probably know by now, SpaceX, which has been a private company for more than two decades, is finally going public. And there is a lot of of discussion about it for a very good reason. It's demanding a very high valuation. It will mean a lot for Elon Musk and the power that he wields, not just over the company, but, you know, over society more broadly, because this is still quite an important company, especially in the space sector,

but increasingly in the AI sector as well, as it has absorbed XAI and the X social media platform in recent months. And so I wanted to have Sean on the show so we could get a bigger picture as to what is going on here so we can understand the context of this moment. You know, what is driving this IPO, the kind of science fictional ideas that Elon Musk is using to justify the valuation and the explanation for why this is necessary and how most worryingly, this is doing a lot to change corporate governance rules and even the way that many major stock market indexes work to really benefit SpaceX and Elon Musk in a way that could set some really worrying precedence going forward when we look at these billionaires who have so much power in our society

and want to make sure that they hold on to as much of it as possible. So I think that this is a really interesting conversation for us to understand where this is going and what Elon Musk is doing now to further reshape the world to benefit himself. It's not a great development, but we should know what's happening. And that is, of course, why I talk to Sean. So I think you're really going to like this one. If you do, of course, make sure to leave a five-star review on your podcast platform of choice. You can share the show on social media with any friends or colleagues who you think would learn from it. And if you do want to support the work that goes into making tech won't save us every single week, so I can keep having these critical in-depth conversations

with so many great guests so that you understand what is going on with the tech industry, these tech billionaires, what they're doing to our world. That all depends on the support of listeners like you. So you can join supporters like Ryan in Richmond, Virginia, and Andre from Bucharest by going to patreon.com slash tech won't save us where you can become a supporter as well. Thanks so much. and enjoy this week's conversation. Sean, welcome to Tech Won't Save Us. Happy to be here. I'm really happy to have you on the show.

I've been following your work for ages. You know, obviously we're both interested in a very similar person and his companies. You can say that. Yeah, and have been writing about them for quite some time. You know, I feel like you generally write more about Tesla, but today we're talking about SpaceX because, you know, for potentially obvious reasons, the company is finally going public after more than 20 years of being a private company. And so there's a lot to dig into in understanding what is going on here because this is likely

going to be the largest public offering in history as much as I understand it. And I feel like a good place to start. You know, we think of SpaceX and we think of rockets, right? You know, Starship and the Falcon 9 and that kind of stuff. But there's more to this company than I think people potentially realize, especially today. So what is SpaceX in 2020? Fantastic question. How much time do you have? You know, that was still the truth up until not that long ago, right? Like, SpaceX was still mostly a rocket launch company, an engineering company, one that was, you know, performing missions for NASA, sending people to the International Space Station, sending cargo up there and sending satellites to space for other companies. And, you know, that started to augment a few years ago when they built up this thing called Starlight. which is its own, the company's own sort of satellite internet network. You know, that's still

pretty complimentary and makes some sense in a lot of ways. But it was really the last year where things started to change dramatically, where Elon Musk had started up an artificial intelligence company called XAI. He had, as we all know, bought Twitter and rebranded it to X and turned it into whatever it is now. And about a year or so ago, he started to fold those companies into SpaceX, first X into XAI. And we could talk about some of the reasons for, you know, why he may have done this. And then late last year, he acquired, using SpaceX stock acquired XAI at, you know, sort of an alleged valuation of around $250 billion for XAI.

But no cash really changed hands there. And so now it's a company that still does those launch provider things. It's still, I mean, just this morning as we're recording, it just sent a, a whole new batch of Starlink satellites into space. I did a cargo mission for NASA a few weeks ago, if memory serves me correctly. And they've done some really impressive things on that side. But as this IPO filing that was made public recently shows, that is not now or maybe no longer a very good business in the way that SpaceX is treating it,

because it's throwing so much of its money into developing Starship. For many years, SpaceX relied on the Falcon 9. Falcon 9's done hundreds of launches. It's proven to be very reusable, which is a really novel thing in the space industry. But now the company is throwing a ton of effort, billions of dollars into developing Starship, a much bigger rocket, the biggest rocket that's ever been created.

And then on top of that, we see that Starlink is really the only profitable part of the business. I think you could be able to maybe argue if you stripped away some of that stuff and just stuck with Falcon 9, SpaceX may have a profitable business there. But Starlink is the only one throwing off profit right now, and it generated more revenue than the either two sides of the business or three sides of the business combined last year. So something like $11 billion out of the sort of total $18 or $19 billion last year.

And then the third leg of this is XAI and the sort of various things attached to that. So that's, you know, X, that's GROC and sort of the data center component of this, which I'm sure we'll talk about too. So that's a rough estimate. And that's losing a ton of money, by the way. They are not just because it's losing money as a social media company and as an AI company, but because they're also investing a ton of money into developing data centers in Memphis, Tennessee, and sort of all this other stuff. So that is just absolutely sucking down all of the profits that Starlink is throwing off right now.

Yeah, so there's a bunch that I can jump into there. And I think that gives us a really good introduction to what this company is, right? It feels like he's kind of throwing all the X companies under one umbrella. And we'll see maybe more companies. are going to get added to that too. Which I should say, like, that has been a stated goal from Elon Musk for a very long time. Like, he sort of famously helped get PayPal off the ground many years ago. At one point, he wanted to call that company X.

He held onto the X.com domain name for a very long time, even though, you know, after he was pushed out of PayPal. And, you know, as Tesla really crested in the 2010s, late 2010s and early 2020s, there was always this idea that he had thrown around of sort of like combining, you know, sometimes he would bring it up, sometimes shareholders would bring it up as like kind of almost like a dare, you know, combine all your companies together. And he would always sort of reference this idea of this X holding company. So I think SpaceX is the cleanest example we have of that so far.

Yeah, that makes a lot of sense. And, you know, when we think about these companies, like, was there a real argument to bring, you know, beyond Elon Musk wanting to have these companies? under one roof, like to really combine the social media and AI stuff with the space stuff. Like, is there an obvious argument there? It's just like, I want to bring things together now. There wasn't until very recently. I think something that we should consider in any discussion about SpaceX's IPO, but especially when we're thinking about how fast it's happening and the sort of rules that are being changed to allow it to happen so quickly and the shape of it in that sense,

is that this was not something that Elon Musk was trying to do a year ago. This was something that came about very suddenly at the end of last year where, you know, this is a guy who has professed over and over that he hates running public companies. He hates that Tesla is public. He tried to take it private at one point using Saudi Arabia as like the sort of cash king back in 2018. And that sort of famously ended in a settlement with the SEC because he had misrepresented that the funding was, actually there.

I don't believe he ever accepted that was the case, but yeah. Yeah, we could spend a whole long time arguing about how he's wrong about that, but it is what it is. But yeah, it is something that was not on the radar. And then all of a sudden, you know, the best explanation we get from SpaceX is this idea that as you look at the leading AI labs in the nation and around the world right now, one of their biggest constraints is the access to computing power. computing power

sort of basically directly maps to how many data centers are built out and how full they are of GPUs and other equipment. And there are a lot of hurdles to that build out right now. We've seen a lot of resistance to data centers, both for training AI and just for sort of cloud storage

and anything else that could require that kind of infrastructure all around the country. And not only does that mean sort of public resistance and a bad public image, but also, you know, local state and even federal red tape in some in some places. And, you know, Musk has always been pretty averse to those things. I think is a kind way to put it. You know, he has demonstrated

over and over again with Tesla and its Fremont plant with the lithium refinery that he's building for, you know, has built for Tesla in South Texas, with the boring company's facility east of Austin. These are just three examples that come to mind that have had, you know, many violations on the environmental side, rack up over the years, or even just a lack of basic, like, applying for a permit to, like, get a driveway built into the Boring Company facility in Bastrop, Texas. You know, like, the simplest thing that you should be doing, they wouldn't do because they wanted to move faster than that process.

So I think that as he was building up XAI, you know, there had been a lot of talk in the space industry, especially from some startups that were trying to run basically a shortcut to this idea that I'm about to talk. about of creating, you know, quote-unquote data centers in space by using satellites that would be equipped with the same kind of like, you know, data center equipment, GPUs and processing and all that stuff. That seems to have been the animist for this of like, you know, I think you can listen to Elon Musk talk about all the other benefits for, you know, quote-unquote data centers in space, you know, the abundance of solar energy. A lot of that is in the IPO

filing. I think the real animating factor is no one's going to stop you in space. right like the FAA regulates space launches and and the landings of the rockets you know the sort of airspace of it all but in space in orbit you know there's no one there's no nimbies in orbit there's nobody telling you that you're leaking you know sort of tainted water into orbit you know affecting people's groundwater there's none of that and so even if like ultimately that idea proves out which is a huge if for a number of reasons and even if the idea idea of an orbital data center is less attractive than one on the ground or one at sea, which some other people are proposing, the fact that it has no one telling him no, I think is

just like, it's got to be at the core. And I think that's one of the things that's driving this IPO and how quickly it's moving. Because again, like I said, this was not on the table like seven or eight months ago. And then all of a sudden it was and then it's been flat out since then. Yeah, the space scientists and like the indigenous people who have problems with all the satellites, you know, in orbit and how it's affecting our view of the night sky and, you know, what's beyond. I guess they don't have as much influence as the people on the ground who are trying to stop developments, right?

But even still, like, data centers in space, like, it's a silly idea, right? Like, it's not happening. It's crazy for a number of reasons. But, you know, you have to think of this in the context of the fact that SpaceX for a very long time, although it does seem like recently this has changed to a degree, has been a company that has nominally been about reaching Mars. And if you think about that, you know, Elon Musk has this sort of inability to think outside the engineering of it all. It is an incredibly fascinating engineering challenge to reach Mars. What you'll never hear him

talk about is the biological challenge of sending people to Mars. And I'm not just talking about radiation, which is a huge challenge in its own right. But to the fact that people struggle to exist in microgravity for long times or just even less gravity than Earth's gravity. Our bodies have evolved to be very efficient at one Earth gravity. And that part has never talked about when we're talking about setting up Mars colonies. Unsurprisingly, it's not mentioned in SpaceX's IPO filing. But when you think of it in that context of like he views everything through an engineering challenge lens, that makes the data centers an orbit thing, you know, interesting on some level

of like you have a ton of talented engineers at SpaceX. They've clearly done something with Starlink in a crazy amount of time, just stood up a satellite network that is in many ways better than any other attempts to create either like mobile or broadband satellite in space in such a short amount of time that like there is a very, you know, there's part of me that's like, yeah, I want to see you try to figure out those engineering challenges because it does, you know, the people who are most experienced in creating stuff like this that is space hardened and can operate in orbit. They have many reservations

about this idea. And usually when those reservations are raised in the public sphere, that only animates Elon Musk to prove those people wrong. A lot of times he can. And a lot of times he finds ways to basically shortcut the rules to say it didn't matter anyways. So like we're in this position where, you know, one of the things I'm looking for in this IPO is like, will, you know, I imagine the price of SpaceX's stock once it goes public will just be mostly vibes-based because it is that's a that's what the market is these days and be like we won't see any real sort of bearing out of this space data center idea anytime soon and you know I think there's a many there's a million different ways that you could argue whether or not that is a better option

than data centers that are being built online and working with the communities where you're trying to build these things. You know, I think you get back and forth in that cycle a lot. I really think it is, it's an engineering challenge that he views it as such, but it is also like, he doesn't have to deal with all those headaches of, you know, people stopping him. Yeah. And, you know, even when you talk about Starlink, like, you know, there are a lot of people who would have problems with Elon Musk as a person who still use this service because, as you say, you know, it is kind of the best one that's out there right now, even as there are other companies trying to build alternatives, but they're still years behind where Starlink is, right? Just to get to the broader point that

you're talking about there, like the reason for the IPO right now, do you think that's related to space data centers? Is that a justification? Is it related to the company needing more cash to do, not just Starship, but also to build out these data centers, whether they're on land or somewhere else? Or is there some further motivation from Musk himself or from investors that is finally pushing this to go public after all these years? Yes and yes, I think. A big component of this, and related to this space data center thing, I think something that keeps getting lost that is important for people to remember is that Starlink is apparently a decent business on its own. And again, it sort of threw off a couple billion in profit last year on 11 billion in revenue.

But that growth of that appears to be tapering already. You know, SpaceX sort of went pretty far and wide with coverage on that. They snapped up a bunch of business deals with airlines, with commercial customers, with governments. And we see some evidence in the IPO filing that that is tapering off because of sort of what they're charging customers now. And there's reason to believe that maybe there's not a ton more headroom there. This idea of orbital data centers is built around having exponentially more satellites in space than an internet network requires. Right now, SpaceX has about 10,000 Starlink satellites in orbit. As far as I remember, the plan is not to double or triple or quadruple that Starlink is really, even if the network grows and the user base grows, it's really more about maintaining that network now because they have a pretty decent amount of coverage already.

when you're talking about many times more satellites to build a quote-unquote data center in space, that naturally requires more launch for SpaceX's launch business. And so it's this thing where like one hand really serves the other of even if they're just trying to prove that tech out, they're already benefiting on the launch side because they have business for the launch side to send the sort of prototypes up into space. So I think that's a big component of it. And as far as what they're telling the markets, this is maybe the craziest thing in the IPO filing that I keep coming back to, which is that when you go public, you show your business, you show how much money you're generating, maybe some projections about how much you're going to be generating, although there are some limits about that with a traditional IPO. We saw a bunch of companies get into trouble with that when they merged with special purpose acquisition companies a couple years ago where you could promise a lot more. and be wrong, I think is a nice way to put it.

But one thing that companies will do is they will try to size up, you know, here's what we have, you know, we have ideas of where this will go in the next year or so. But here's like what we think is the biggest picture, you know, something that's almost a bit intangible, but here's the total addressable market of like what we think that businesses that we have now could achieve if everything goes right. and SpaceX is going to the public markets and saying that their total addressable market is around $28 billion, which is like roughly US GDP and is a lot of money. Let's be real.

To be clear, $28 trillion, right? Yeah, $28 trillion, yes. And the craziest thing about that is that they are saying that about $22 trillion of that is, quote, unquote, enterprise AI, which they don't define in great detail. I had initially assumed when I saw this chart, because you can imagine that dwarfs what they expect the total market for launch capabilities to be, for what they expect social media business to be,

what they expect all of those lines of business. I was expecting that to include this idea of, okay, if you're going to build data centers in space, you're going to rent out the compute. Is there something that we're seeing them shift to even on the ground here now? with this sort of last-minute deal they've struck with Anthropic very before the IPO, I initially assumed that, okay, that, you know, how do you get to that crazy of a number

and get bankers and lawyers to sign off on it? That's not it. Like, it is, they are talking strictly about enterprise AI use. There is some weird language in there about, like, quote-unquote human augmentation, which they don't really define well, but, you know, you can read as sort of, like, think of the craziest version of, like, having an agent. AI agent now extrapolated out in like 10 or 20 years. I think that's kind of what they're baking into that assumption.

But like we're talking about like B2B SaaS for the solar system. Like that's what they're saying. Like their biggest opportunity is. And that's just a crazy thing to talk about now, especially because XAI is the worst part of the business by far. It's so bad that like its own enterprise products that it is behind on building, as it is with most of XAI stuff right now, there's been a lot of reports. about how XAI's own employees didn't want to use GROC's sort of enterprise products,

and SpaceX has had to turn to cursor and basically acquire, wink, wink, nudge, we'll finish the acquisition after the IPO to build up something that actually resembles like a good enterprise AI product now. And so, like, if you're starting from a place, not to mention the fact that like all of the XAI co-founders have left, a bunch of the staff have left. And so it's, you know, it's this shell that SpaceX just paid, you know, 250 billion worth of stock a couple months ago to acquire, and you're saying that starting from that point, you're going to reach $22 trillion of a market.

There's no timeline attached to that, but that's just insane. The IPO filing itself is crazy in a lot of ways. That's easily the most insane thing. There's the insanity to exactly what you're describing, right? Talking about the enterprise AI applications being a $22 trillion market that they're going to realize in the coming decades or whatnot. But it was also wild to me to read. I was reading those numbers and I was like, this needs to be wrong.

You know, not in the in the S1 itself, in the filings itself, but in the news reports that I was reading because I was like, wasn't the whole point of this company initially that they're going to go to Mars. They're going to build this big city on Mars and all these kind of like commercial applications. And I'm like, okay, and now the pitch to investors as this goes public is not that the total addressful market is like this Mars colony. and all the kind of like new stuff that they're going to be in space, but it's the vast majority is now AI. Like it was kind of wild to be. Yeah. It, yeah.

I mean, I think there's a lot that can be said about the Mars piece of this. It's interesting to me that the Mars is, Mars is mentioned fewer times than the moon in the IPO filing. That's understandable to a degree considering that SpaceX is now, you know, sort of deeply enmeshed with NASA's attempt to return us to the moon with the Artemis missions. And NASA is quite reliant on starship being a successful rocket that could eventually bring astronauts back to the lunar surface on a very short timeline, which is nerve-wracking. But it was not more a little more than a year ago that Elon Musk was out sort of in the public saying the moon is a distraction.

You know, Mars was always, you know, sort of the goal of this. And I bring that up not because like I truly believe that he believed it, but I do bring it up because like, A lot of the people who work at SpaceX believe that. Like, I've, you know, it is rare to see a lot of SpaceX employees speak out publicly. Some of them post on X, which is no surprise. But, like, you know, there have been some interviews where you hear people who are working on the engineering side of things, who are working even on the construction side at Starbase in Texas, their sort of company town there.

Or even on like the health side, like they do have some like science, you know, scientists folks inside the company who do occasionally publish papers and things and are trying to tease out some of the bigger scientific problems that they have to deal with, not just with like spaceflight in general, but in particular with human spaceflight in orbit for potential moon missions in the future, all of them seem pretty realistically bought into that or have been bought into that idea of trying to get to Mars in a way that is, I think, harder to dismiss than you could with Musk, who, you know, changes so many things on a whim, and including this, like where now, you know,

Mars has taken a very big backseat to SpaceX's plans in a way that is not like, you know, I think a lot of people have spent the last 20 years saying you'll never get to Mars and would not be surprised that they're now focused on moon missions. I don't think that's really the, you know, the sort of animating factor here. I think it really is like there's more money to be had in the near term by focusing on something that is a little bit more achievable. Yeah, that makes a lot of sense. And I was hoping we could dig into some of like the risks around this business as well, right?

Obviously, they're saying there's this massive total addressable market. They're going for a valuation of like $1.75, $1.8 trillion in this IPO, right? Like, it's a massive one. But even as you're talking there, it's clear that there are issues, right? That, you know, this company could clearly run into that would make it not as valuable as it's suggesting. And as you mentioned, you know, the financials are still kind of up in the air where a lot of parts of the business are losing money. The business as a whole, I believe, lost over $4 billion. last year. And, you know, there's been top for a while. Obviously, it's been a private company,

so we didn't know exactly the finances, but I believe it's been kind of expected for years that SpaceX wasn't really making money. And this is kind of reflected in the details here. So if we can break it down by piece, and maybe we'll start with the space piece, like, what are the biggest risks to that part of the company? Is it that Starship doesn't work out as planned, or is there even something bigger there that risks kind of the vision of what that aspect, you know, the kind of original part of SpaceX would be. Now, I think you hit it. I mean, I think it's Starship all the way.

And for a few reasons. One, just the basic will it work? Let's pull back a minute and think about what Starship is. Starship is a much, you know, SpaceX started really with, you know, they had some smaller prototype versions, but the Falcon 9. The Falcon 9 was like the first real rocket that they developed that became reliable, had some of its own problems, exploded on the launch pad at one point

and blew up a satellite that Facebook was going to send into space, lost a NASA cargo resupply mission at one point as well. So it survived a number of sort of call it life or death corporate life or death challenges, but it ultimately proved out that the Falcon 9

is a very reliable rocket and reusable, like I said before, in a way that no one has ever made in the spaceflight industry. We used to take the space shuttle and refurbish the space shuttle, but all the rocket parts that would send the space shuttle

into space were basically discarded. And so it started there. Starship began as like, okay, we have this other kind of elevated version of Falcon 9, which is called the Falcon Heavy, which is the one where you have essentially three Falcon 9 stack next to each other and a taller one in the center.

And that was built not only to just send larger payloads into space, but also to tap more into government missions. It allowed them to send heavier national security missions into space. And that really, you know, beyond NASA, that was the thing that really, I think, helped them click over into becoming a defense contractor because it allowed them to sort of work with the Pentagon much more closely. Starship is a radical ground-up sort of rethink of that system. Like I said, Falcon Heavy is like an iteration, really. Starship, they literally started with what looked like a water tower in kind of the middle of nowhere, Texas, and, you know, sticking rockets on it and

having a sort of like hop up and down, which is really how they started the earliest Falcon rocket tests. And it issues a lot of traditional aerospace ideas in service of, again, that kind of like engineering focus of like initially we won't need to make something like this that is like human rated. So like what is the most bare, cheap version that we can do and then build it out from there? And it's an interesting approach for a number of reasons, but that's one of the reasons why this is a stainless steel rocket. It is not built with composites like we have seen so many

other rocket systems around the world built with. And they've just been sort of steadily scaling that up since then. And they have accomplished a lot with Starship so far as far as being able to go from water cool, you know, water tower launching in like the desert, you know, the Texas like scrub to a system that is far more evolved and mature and is starting to resemble aspects of the Falcon 9 and Falcon Heavy as far as sophistication. And in some ways, even taking it further. But the company has yet to prove that the whole system itself, we're now in the third version of Starship.

It has yet to prove that that is able to complete a full mission by getting a payload into orbit and also reusable. There are still a lot of those things that they need to prove out. And then the real complications come into, even if SpaceX accomplishes that, which I think there's a chance it does, even if it gets to the point where Starship works and is reusable, SpaceX has built its component of NASA's attempt to bring us back to the moon around some really complicated ideas, one of them. And it may be the primary, most complicated one being that takes a lot of propellant to get to the moon.

And it takes a lot of propellant to move astronauts to the moon. And there are a few different ways you could try to figure out that problem. But SpaceX's a solution, especially when you're talking about building a moon base or anything beyond just one trip of a few humans for a few days or whatever it may be, their solution is in-space refueling of like sort of starship kind of tanker versions of the upper state. And that is just, you know, no one else is trying anything really like that. No one has ever really proved that that could work at a giant scale, especially because it's going to need multiple of those kinds of refueling, you know, sort of interchanges for missions like what NASA wants to accomplish. So there are a ton of complications there.

So like all of that still needs to be done. And if any of those pieces don't work, that is like the sort of foundation, I think, in a lot of ways of what the IPO is built. around. And you see a lot of the risk factors in the IPO mentioned some of this stuff. I mean, there's, there's a lot of hedging in the legal language about, you know, you can see that the SpaceX board essentially says it's, you know, quote, improbable that, you know, the Mars colony and orbital data centers, especially at the scale that Elon Musk has talked about, those are, those are improbable of being achieved. But I think that the more foundational ones are like, you can't

even start thinking about those until Starship works. And so I think that's really the biggest thing here of like, and that's why there is so much attention on every start ship test launch where, you know, they need to be making progress and they need to be understanding what goes wrong when things do go wrong because that's their whole approach to things is sort of we'll let things fail and then we'll figure it out. And if they don't figure all of that out and then start proving out the really crazy stuff like the sort of in orbit refueling, then, you know, none of this really goes anywhere. Yeah, that makes sense. And I feel like I've been reading more and more about, you know, kind of the question of whether Starship will actually end up being

as reusable as it was initially envisioned to be. And then if it's not what that does to kind of like the economics of the launch and what that means, because obviously it wouldn't be nearly as cheap if you can't reuse as much as the, as much of the rocket, right? It's, I mean, like, at the basic level, it's very tough to do because you're launching a much larger rocket that's suffering through far greater atmospheric pressures on the way up. And, and, and, sort of internal forces from the most powerful assemblage of rocket engines you could ever imagine. It is just, you know, they, again, they've proven reusability, not endless reusability, very robust reusability with Alcanine.

I just think that's an important distinction. But it is just, you know, it just becomes a greater challenge that scales up with the scale of the rocket and the things that it has to endure on the way up and on the way down. Yeah, it makes perfect sense, right? And so if we, you know, that's kind of the space piece of the business. If we then look at, you know, the newer AI and social media part of the business. Like is the risk there? Obviously, the social media business. I'm sure that's not as big of a thing. We know it kind of loses money. Like, you know, but it's not the biggest. What's the cost of free speech to you? He's saying free speech. Right. You know, we can afford to lose money for free speech. But, you know, then the other piece is obviously the AI bit. And as you're talking about, you know, this is where they're really. putting the idea that this is where most of the kind of the future growth of the business is, right, on this AI section. And I would imagine there, you know, part of the risk is one that they can actually pull off

these tools, as you're talking about, there's already, even the people internally don't want to use them, which is not a great review. And then, of course, there's the bigger piece of like, is the generative AI market really going to play out as these companies are expecting it to, you know, in the longer term? So, yeah, what else is, you know, is that part of it? What else is there? You know, what are the risks to that? Yeah, you know, it's, I laugh at the internal use situation.

I mean, it's funny on his face, but it's funny at another level because one of the reasons that Musk has pushed, one of the directions, I guess I should say, that Musk has pushed XAI in. And one of the reasons that it now has two data centers in and around Memphis, Tennessee, both of them aren't quite there. is that he has this fixation with Microsoft being like this pervasive corporate software behemoth and has criticized the quality of its products, I guess you could say, which like fair. Like we as a news organization, we just had to switch to Microsoft products last year. It was the first time I've used them in a long time. And like, I get it, man.

I don't want to use these things anymore. They're terrible. They're big problems. And especially as they've been like trying to. to inject co-pilot into like every bit of it now too. It's not helping. No, but even the basic stuff. It's like, why is Microsoft word changing the font without me asking it to change the font? Whatever. So I am sympathetic to that piece of things. But there is an enormous gulf between what he's starting to try to build with XAI and the ultimate version of that goal. As far as the

risk stuff goes, you know, you mentioned Gen AI. Like, I think there's a really interesting thing happening in the AI world that I feel like is going kind of unspoken, which is, you know, we're getting some reports, believe them with as much a grain of salt as you want, but some reports that like Anthropics business is looking better than the others. Let's put it that way, right? Like they are losing far less money than an open AI. One of the reasons I think they're doing that is because they're easily arguably the most focused of these companies. They are not out here buying a podcast. They are not out here, you know, going in a million of directions. They don't have an image generator.

generator. Which is Open AI to be clear, buying the podcast for listeners who aren't aware. Yes. And Open AI has like... Not this podcast. To me, though. God help us all. But they are the most focused and aren't doing things that you would think they might be doing, which

is like even having an image generator. And I think even other companies like Open AI and even Google to a certain extent are not getting the return that they thought they were going to get on some of those things, including image generation, which is like, I think to me that's a pretty radical thing considering that that was a lot of people's first touchpoint for generative AI alongside

LLMs. And so I think there's a huge risk there. There's a huge risk there just like at the highest level of like, is there ever a situation in which you can justify the amount of money you have to spend to make that technology work set against how much you can get from people as customers? And I think that's just an enormous question. And that's just one piece of XAI and the challenges that it faces. There are many others involving the fact that it has a lot of legal challenges around the world because it's been generating CSAM.

And there are darker challenges, too, that I think present a risk to it. And SpaceX at least acknowledges those in its IPO filing so that investors are aware of those, too. So I think it's worth pointing that out. Yeah, absolutely. And I think you're spot on there. And I feel like the flip side of what you're talking about with what's happening on the side of the AI companies and the returns and what's making sense. is I feel like we've also been seeing more reports from, you know,

from other companies questioning the, I guess the value of spending so much on generative AI and like what they're getting out of it. You know, the most recent being the president of Uber. And I know another Uber executive has talked about this in, in recent months, just about how,

you know, they don't seem to really feel that the amount that they're spending on AI tokens is really, you know, benefiting them in the long run. and that they should be focused more on using humans, or at least this is what they're saying, you know. That's another, I think, foundational risk here,

not just for SpaceX and XAI, but also for the other AI companies, which, like, I feel like people don't want to talk about this, which is that what people are paying now to use these tools is not necessarily anywhere close to what it should, they should be paying, you know. We are talking about hyper-growth companies that are trying to accumulate and hold on to users

for as long as they can, so that these other companies, is like enthropic and opening, I can go to their own IPO. It's interesting. Like, there are aspects from the biggest tech company IPOs that they all want to replicate. They want to replicate Amazon being able to lose a bunch of money for a decade or more before they ever even come close to turning a profit. They all want to copy Google and meta's like governance structure or mutate it even farther to basically remove all power from shareholders. But there is that fundamental sort of like the math isn't mathing yet and like nobody cares because there's 10,

of billions or hundreds of billions of billions of investment going into these companies, either through private investment or through this SpaceX IPO, that can keep that furnace sort of going for a while. And with respect to XAI, that is why we saw them,

you know, in some respects, take an L and turn to Anthropic and say, okay, we've got this IPO coming up. We, you know, without, I'm sure they didn't say this explicitly, but without our AI, technology really catching on anywhere in any meaningful scale. We built out these two data centers that we don't really have the use for.

And you seem like you're constrained a little bit because like these data centers aren't being built out as fast as we thought, which is like another red flag. You can use the compute in one of ours and we'll take a bunch of your money. Just on its face, that agreement shows that, you know, XAI and Elon Musk are coming, you know, sort of admitting a bit of defeat there. people have framed that as like, oh, this is a huge win because they're like doubling the revenue that's coming from that business in an instant. But you look at the terms of that deal, at least as it's spelled out in the IPO filing. And it is like just very tellingly coming from a place of weakness on XAI's side.

Like it is a thing that Anthropic can walk away from at any point, just 90 days notice. You do not see that kind of thing hammered into an agreement unless one side of the agreement has an enormous. amount of power over the other one. Like that is just an unheard of kind of thing, even in this weird world of like AI self-dealing and like sort of fast-moving data center releases and all that stuff. Like so that is, you know, that's a huge thing.

And then I think the last big risk here on the AI side related to all this stuff that we've just talked about is like, if these companies don't need as much compute as we think, they think they do and the data center build out stuff starts to slow, which there are signs that that's already happening, who needs data centers in space, right? Like, Musk has this grand vision of like, that's not just for powering B2B SaaS for Jupiter or whatever,

but like also because like he wants compute to be able to spread throughout the solar system and the galaxy and help spread consciousness to the stars. Like, whatever. Like there is a version, but that is, you know, he can sell a lot of dreams to people. That one specifically, I do not think he will have much luck selling to public markets over, especially if these other pieces of SpaceX start to fall apart. Yeah, I think very well said.

And I feel like one of the other risks is obviously Musk himself. And you mentioned kind of the legal structure, these companies wanting to copy what Google and Facebook had, where his people are probably aware, Mark Zuckerberg basically rules over Facebook and can't be displaced because he has this special class of shares that gives him extra voting power or whatnot. so he controls the company even though he doesn't have, you know, majority of the total shares.

And it feels like what, you know, Elon Musk wants to do at SpaceX is just kind of turning that up, like putting that on steroids. So what are we seeing there and how is Musk trying to make sure that even though this company is going public, he will still be the emperor of the empire? Yeah. Yeah. I've been really turning this over in my head, like trying to think of a way to explain. it at a simple level, what is SpaceX going to be as a publicly traded company? And I feel like

the best thing I can think of is like you're buying like a sort of tokenized bet on like the destruction of corporate governments in America. Like that is like the maybe the cleanest thing I can think of of like as a shareholder of this company, you won't have basically any power for a number of reasons. And so like you can buy it to trade the stock and try to make some money or you can buy it and hold on to it and expect your return to grow over the years and that's fine. But that's not the only reason to go public. Like the reason that we have public markets is that we have people who have a say in those companies.

And, you know, that power has been diminished over the years for a number of reasons. I mean, and you brought up meta. We talked about meta in Google before, you know, that idea of like this dual class super voting share structure had not actually been around. Like it was around in the very early days of the stock markets in the United States. States and it really went away in the Great Depression for obvious reasons. And they brought it back, you know, sort of with a lot of help from Silicon Valley and a lot of help from VCs and just sort of the way that they were sort of pressuring financial regulators at the time.

Is this also kind of because of the narrative of like the founder that they were able to use and like the idea that certainly helped it. Yeah. Yeah. Yeah. But yeah, this is taking things a lot farther for a number of reasons. I'll try to sum them up quickly. One, yes, voting control. I mean, Musk is never going to lose voting control of this while he's alive. He has 85% of the voting power now as the company heads to IPO. The expectation is that will dilute some, but probably not, it will not dilute beyond, you know, lower than 50%.

The company has set itself in the IPO filing. It is what's known as a quote unquote controlled company, which means that somebody has more than 51% of the voting power. And so don't expect that to change. He holds essentially all of the class B shares that hold these super voting powers, 10 shares, everybody else who owns Class A shares, which will be offered in the IPO, only get one vote per share. You'll never be able to outvote him.

That not only means he gets to basically approve every change of the company, it means he'll be able to essentially, there are fewer restrictions on how many independent directors they have when you're a controlled company. So that means you can fill the board with friendlier people. they already have quote unquote independent directors on their board of directors which are just not independent directors. There are people with relationships to him or reasons to sort of go with what he wants to do.

And it's just, you know, that's never going to, they're not going to really break from him. So the control is an enormous piece of this. And then the other piece is sort of like stuff that SpaceX is doing in its filing and also the result of some of the things that Musk has done with Tesla. Tesla recently had a big fight about its corporate governance that lasted from like 2018 up until last year, essentially, where they had approved a financial compensation package for Musk that was going to be worth around $56 billion. But they didn't really properly disclose to shareholders, sort of how that was negotiated.

And through this lawsuit that happened in Delaware, we found out that like, you know, Musk essentially admitted he was in a negotiation. negotiating against himself. Like, usually in those situations, you're supposed to recuse yourself. The board is supposed to handle that stuff. There are compensation committees assembled. But he didn't do that. And, you know, ultimately, the judge ruled that that was the case.

And so therefore, the shareholder got won the case and was supposed to take a bunch of money. And the pay package got shrug down. That pissed off Musk a lot. Eventually, it got turned around by the Delaware Supreme Court. So, you know, good on him. It didn't really ultimately matter. But it pushed him to move away from Delaware and into Texas. And the reason that that's important is that.

Delaware has spent decades, a century really, building up a body of casework and a very clear understanding of sort of, and a quick turnaround in the court cases of sort of corporate power and challenges that shareholders can bring and being able to resolve those disputes quickly. Texas doesn't have any of that sort of case law history to rest on. They have a new business court that could go in any direction. You can imagine which directions it's going to go with the way that Texas goes with these things. And so SpaceX is basically, you know, there are a couple different ways as a public company shareholder you can try to sue the company or sue on behalf of the company against directors if you

think that there's fraud. And, you know, to put it simply, all of those ways, all of those avenues that you typically have, SpaceX has thrown up a ton of roadblocks for. So it's going to force some of these challenges through the Texas business court, which will be very friendly to SpaceX. Some of the challenges that, you know, you typically could have taken in federal court, you now have to own 3% of SpaceX's stock by Texas's state rules in order to bring those challenges, which, you know, if they IPO at $1.75 trillion, that means you have to own a $52 billion stake in the company. Like, A, no one's going to be able to own that other than an enormous institution. And then B, those institutions are going to be disincentivized from ever trying to challenge him.

And so there's just all of these things that are happening. And then, you know, he also is ensuring that he's controlling the company. It's interesting. I heard, you know, Ann Lipton, who is a law professor who I spoke to about this for the story that I wrote, has also made a good point elsewhere where she's looking at, she didn't say this specifically, but she was essentially looking at some of the vulnerabilities that he has had at Tesla, where he owns 20% of the voting power at Tesla. But there have been a lot of lawsuits, like the one I just mentioned, and a lot of other challenges and questions about his consistency of leadership there going forward.

What she has said is he's like duly insulated himself from all of those challenges. challenges here at SpaceX. So not only is he making sure I won't have to face X, Y, or Z problem again as the ruler of SpaceX. I'm also going and creating an outer wall of defense against my control. And one more of those things that happens is there is this like already kind of heavily mocked compensation package that he has at SpaceX where he can unlock untold amounts. You know, it's a billion shares. So like I think there's been reporting that the IPO price will maybe be around $100, $100. So, you know, already that's $100 billion maybe worth of a compensation package.

If the, you know, it scales up, he has to accomplish a bunch of different, he has to increase SpaceX's valuation to multiple trillion dollars. So like, you can imagine that package could be worth far more, maybe a trillion dollars or more. The value of it almost doesn't even matter. Those billion shares are all more super voting shares. The mocking has happened around. He gets to, he can't sell any of it until they have. have a colony on Mars of a million people. But he doesn't need to sell them.

He already has them. And he can vote them. And I think more importantly, so that insulates, he already has crazy vote control. So now he will have an assurance that, you know, even if there is some kind of dilution down the road of shareholder power, he can insulate against that because he has these new shares he can vote. But more importantly, I think, for a lot of reasons, he can borrow against those shares. And that's something that he's done for a long time at Tesla and at space.

He uses his giant stakes in these companies and he borrows a ton of money against them. That's not only a way to dodge paying tax on those unrealized gains now or, you know, dodge taxes by issuing a salary that you would have to pay tax on. But it's also sort of a way for him to just sort of access a ton of capital and deploy it how he sees fit, whether that's in a presidential election or starting up other startups and things like that. And so like there's just so much power funneling to him here that again, back to the kind of original point I made, it's like it's hard to really cleanly explain to people what this is because this is not a public company in the sense that we've been used to these days. And while things have

been moving in this direction, it's, you know, this is just a singular example of something mutated that is going to be on public markets. Yeah. And I guess it sets up the risk than that if this company can do it what other companies are going to try to replicate, you know, this in the way that, you know, we had other tech companies wanting to replicate what Google and meta did with their structures. If, you know, Elon Musk and SpaceX can get away with this, which it looks like they're very much going to, then what does that set up for the future? And just to pick up on a few of the points that you were making there, you know, you mentioned how only institutional investors are going to be able to own this big of a stake in the company to be able to challenge him. And I already saw, you know,

Denmark's, I think, public pension fund or something. saying that they wouldn't invest in SpaceX because of the governance issues with it. And so then I guess the question sort of becomes if bigger institutional investors are not even going to be willing to get that big of a stake because of the risks that could come with being associated with this company. And I guess you have to imagine that, you know, if he doesn't want to be held to account at all and there have been these issues at Tesla, as you've been mentioning, rolling Tesla eventually into SpaceX would make even more of those go away.

because at SpaceX, I believe it was in one of the stories of yours that I read, he will be the CEO, the CTO, chief technology officer and the president of the board. So he's like just taking up all of these major positions. You know, feel free to comment on any of that. But I also have a question around the kind of inclusion in these index funds, right? You know, the NASDAQ 100 and potentially the S&P 500, you know, which basically bring together all of these major companies. And a lot of the reporting suggests that, SpaceX is going to get, like, inclusion into these funds or, you know, these, these kind of collection of companies very quickly, which will also help to maintain, you know, kind of its value or kind of like flood in money. What do we, what do we make of that? And again, feel free to comment on any of the other things I mentioned there. Yeah, I mean, we should definitely, let's talk about that really quickly because that's a, you know, a thing that I think has gotten a lot of attention.

I think it's important. SpaceX will list on the NASDAQ stock exchange. You basically have two choices of a company like this, the NASDAQ or the New York. stock exchange. The stock exchanges themselves are not just a place where stocks get traded, but they also play this other important role where they kind of hand select, they have criteria that are supposed to be met, but they kind of hand select companies to fit into these indexes, the NASDAQ 100 or New York Stock Exchange has its own. And one of the things that's happened with public market investing over the last, you know, especially the last decade and the last

five years is that there has been this sort of proliferation of what are called index funds. So like you investor, you know, you 401k holder, it can be tough, you know, like there are all these people out there who are telling you, you know, buy into my fund because I actively manage and I'll pick the best stocks for you or, or you can, you know, do, spend all your time doing your own research and reading 10K filings or S1 filings and making your own bets. But like, what if we just told you that, like, you could put your money in this fund that owns, you know, an assemblage of percentage of stock of all these other companies that are kind of similar. Some might just be the ones that make the most money on a certain exchange. Some might be tied together by what they do.

They may have similarities there. But these index funds that sort of are meant to say, like, hedge your risk, pick this one. And in particular, these exchanges have their own indexes that a lot index funds map to. And the reason that's important is because, like, even if you're looking at all of this stuff where, boy, I'm interested in SpaceX, but this governance stuff really scares me, because I'm afraid I'll never be able to take any action as a shareholder because I don't like what the company is doing. You may still wind up invested in this company anyway as if you own a 401k or if you're, you know, just sort of a public markets investor who's bought into an index fund. You can have a lot of feelings about that either way. I think the index fundification of

of the market has some downsides to it. I think the bigger risk to people is this idea that not only is space that's going to be included in those things, that was always going to probably be the case. But it has pressured these exchanges to change the criteria for those index listings. And so not only change their criteria, but accelerate them. So it used to be like, you would go public. You do this thing called seasoning where the exchanges are just basically trying to say, let's just see how you float for a bit, you know, on the public markets and let a price sort of settle out and show that you're, you know, you are what you are.

That's going away now for these larger companies. And the problem with that is that if you used to know that a public company was maybe going to make it to the S&P 500 or the NASDAQ 100 in like six months or so, there would be some trading around that as you got closer to that date. Because you could say, oh, look, they've got a profit now and they do this and they take that box. And so they're eligible for the S&P 500. So that was its own little market. But now you know that they're going to be included in a matter of days post IPO. And when you know that they're going to be included in this index, that means you know that a bunch of investment funds are going to buy into it.

And they have to buy it. The index funds themselves have to buy into it if it gets listed into the NASDAQ 100. And if you know that, then you know that now is going to be a cheaper price for the stock, most likely, then it will be when they come in because they have to buy in at whatever price it is. And so that's going to create a ton of pressure up front at the IPO to drive the price up. There are a number of other things that SpaceX is doing to drive the price up at IPO, too. They're only selling a very small percentage of the company's shares relative to what IPOs normally allocate. So that also restricts the supply and increases the demand.

And so there are all these things that are pointing to a sort of architected IPO that will drive the price up, not to mention just the general sort of enthusiast Elon of it all where like, you know, He used to just say stuff on Twitter and like people would trade a stock that sounds like the thing he said up for a day, just to have fun with it. And the risk there really comes from if we get to the other side of those index inclusions and the index funds that hold your 401k or the index funds that you're directly invested in bought in at that artificially elevated price, you run the risk of getting to the other side of that and seeing the market really finally take a sober look at space. for what it is, which we haven't really said, is not a business that should be valued at $1.75 trillion. I mean, that's my personal opinion. I'm no financial expert, but by all metrics of how companies tend to be valued, what they're

making and even what they're promising in the near term does not equal that in any way, there's a real risk that that comes down. And you get into this situation where these index funds, or their 401K, have bought it in a high price and now have a huge amount, potentially huge. It's limited by the fact that these funds only by a percentage of these stocks. But like you have, you are now starting from a worse place than you were just a few weeks or a few months ago. That's fascinating. You know, especially, you know, as I hear you describe that, I think a lot about Tesla, right? And how there have been talks for a long time. You know, this isn't a controversial thing to say, but Tesla is way overvalued for, you know,

the business that it is, for the money that it makes for what it even might might become. right? And a lot of that valuation is based on hype and excitement, but also on promises that, you know, are very wishy-washy and are likely not going to pan out. And now to see a lot of that replicated, but on a much greater scale with SpaceX, you know, obviously I think brings up some major concerns. And so I guess my final question for you is this IPO is clearly coming quite soon. There's a lot to discuss around it. And I'm sure there's still going to be more information that's coming out that's going to come out about it. But where do you see things going in the next little while? are there things that we didn't discuss that you think are worth mentioning about this? Or what are the biggest things that you're going to be watching? Well, I really do think it's important for people to think about how little they're going to be able to do as public shareholders of this company. It sounds like a real kind of, you know, teachery thing to profess like, you know, you must eat your vegetables with this sort of cocaine ride that is this stock. But like it's just important because we've never seen such an imbalance as far as I can tell of power when it comes to the people who hold the stock of a company versus the people who run it. And, you know, that matters not just like at a philosophical way, but because like Elon Musk is a guy who's demonstrated over the years that he's willing to take shortcuts and also demand a ton out of the people who work for him to the level that is detrimental to those people in some ways.

and in differing ways. And you don't have that check over him in this situation now. You know, as you, it was still an uphill battle at a Tesla or his privately held companies, but it is, you know, this is now a public company and that check is just not going to be there. And you could sell the stock if you own the stock, but like you're limited there to buy sort of a number of forces. I expect this to, you know, go up. Number will go up, I imagine. I don't know how far it will go up or how long it will go up. But the thing that I'll be looking for is once we get to the other side of those index inclusion especially,

there is a bigger gap here than at Tesla as far as the fundamentals of the business and what they have to talk about to the public investors and to the analysts. And a lot of the people who help shape the narrative of the stock and everything versus what they're promising. And what I mean by that is like at Tesla, yeah, they're making some really crazy promises. Optimist is going to usher in this age of abundance. So we're going to have, everybody's going to have high universal income because robots will do everything and whatever. You know, some of the people believe that stuff and that's why they hold on to the stock and they think it's going to go up.

Other people are like, yeah, sure, that's nice to have if that ever happens. I've got an option on that in the future by holding this stock now. But I also think there's a pretty good business here as far as the car company and the energy storage business. And it's not, you know, those two things are not anywhere near each other as far as the promise and the actual practice of it. but, you know, it is a more reasonable gap to manage than at SpaceX. Where at SpaceX, when we get on these earnings calls now with Elon Musk and whoever else will be on them, they're going to be talking about Starlink. And boy, that's not going to sound as exciting as like, you know,

even Tesla's sort of car business that isn't growing anymore, it's not as exciting as that. And the gap between what the company is actually doing versus what is being promised is just so much larger than it is a Tesla. And I'm interested to see, for a number of reasons, I don't think that there are going to be ways for this to go wrong. But I do think that, you know, especially while Starships being proven out, that that gap's going to be something to watch. And, you know, will people just be too fed up with, I really can't hear about how, like, Starlink is only growing at 20% this year anymore when you were talking about getting us to Mars? Yeah, absolutely. I think there's going to be a lot to watch here.

And, you know, I think as you mentioned, what it does to accelerate Elon Musk's power is something to be very concerned about as well. Sean, really great to get all of your insight on all of this. You know, we're going to continue watching it and certainly reading your reporting on how things are going. Thanks so much for taking the time. Thanks for having me. Sean O'Kane is a senior reporter at TechCrunch. Tech Won't Save Us has made in partnership with The Nation magazine and is hosted by me, Paris Marks. Production is by Kylie Houston.

Tech won't Save Us relies on the support of listening. like you to keep providing critical perspectives on the tech industry. You can join hundreds of other supporters by going to patreon.com slash tech won't save us and making a pledge of your own. Thanks for listening and make sure to come back next week.