← Channels with Peter Kafka
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- [00:00]
Peter Kafka
Adobe Acrobat your new foundation. Use PDF spaces to generate a presentation.
- [00:07]
Max Chafkin
Grab your docs, your permits, your moves,
- [00:09]
Peter Kafka
AI levels up, your pitch gets it in a groove.
- [00:12]
Max Chafkin
Choose a template with your timeless cool.
- [00:14]
Peter Kafka
Come on now, let's flex those tools Drive, design, deliver, make it sing.
- [00:19]
Max Chafkin
AI builds the deck so you can build that thing. Do that, do that, do that with
- [00:24]
Peter Kafka
Acrobat learn more@adobe.com do that with Acrobat when you're ready to start your business, Northwest Registered Agent helps you do more than just file paperwork. You get all the tools to build a real business identity from day one. A business address, website, phone number, operating agreement, free guides and more at no extra cost. And with Northwest, your home address, personal email and phone number. Stay private. Don't pay hundreds or thousands of dollars for what you can get from Northwest. For free, visit northwestregisteredagent.com profgfree or and start using free resources to build something amazing. Get more with Northwest registered agent@northwestregisteredagent.com profgfree.
- [01:15]
Max Chafkin
You can tell a lot about a person by their accent. I really do say I park my cat and havid yard. Everyone around here says like a coffee and dwog. We're so attached to the way that we sound because it tells a part of the story of who we are. Your accent Dakote it that's this week on Explain it to Me. Find new episodes Sundays wherever you get your podcasts.
- [01:47]
Peter Kafka
From the Vox Media Podcast network. This is Channels with Peter Kafka. That is me. I'm also chief correspondent at Business Insider. And today we are focusing on Elon Musk, which feels a little weird to say since we have already spent an enormous amount of time focused on the world's richest man. You could argue we've spent more than enough time. But now Musk is approaching a truly meaningful moment for him and maybe for the rest of us via the IPO of his SpaceX conglomerate. It could be the biggest IPO in history. So yes, it is time to talk about Elon again. Specifically, what is SpaceX in 2026? Is it a rocket company or an Internet company? Or an AI company? Or all of the above? What does Musk want to do with it and why is he taking it public? And what does Musk in 2026 mean for everyone else? Remember just a year ago, Elon Musk was co president of the United States. He was selling Teslas on the White House lawn. And yes, he he and Trump broke up, but they seem pretty chummy again these days. Just recently, for instance, he was reportedly sitting on a call between Trump and Indian Prime Minister Narendra Modi over the future of the war in Iran. That seems like someone we should pay attention to. Here to focus our attention is an actual Elon expert. That's Bloomberg's Max Chavkin, who has spent years reporting on Musk and the ecosystem around him. He's smart, he's perceptive. You are going to like hearing from him. So here's me talking to Max Chavkin. I'm joined by Max Chavkin, who is an excellent Bloomberg businessweek columnist focused on the intersection of power, money, and the tech industry. He wrote an excellent biography of Peter Thiel called the Contrarian. He podcasted exclusively about Elon Musk for a year, and he has now moved on to a new podcast, which is called Everybody's Business. Everybody's Business. So go check that out as soon as you finish listening to our conversation. Welcome, Max.
- [03:47]
Max Chafkin
Hey, Peter. You know, some of us did not stop paying attention to Elon Musk even when he left the White House.
- [03:52]
Peter Kafka
You were required, had to, by your employers to keep paying attention. It is weird. Like, he's omnipresent, I feel, in my life, but it definitely feels like the volume and the attention he was getting, certainly during Doge, that has gone away. It's kind of remarkable. We can talk about sort of why he's lower. He's lower profile, but the profile is going to get very big. There's going to be this giant SpaceX IPO, which is the reason for us to have this discussion. But it's really a jumping off point to talk about Elon broadly. And congratulations to you for surviving a year of exclusively podcasting on Elon. That's. I don't know if that is acceptable OSHA requirements. Here's a basic question for you. What is SpaceX?
- [04:37]
Max Chafkin
SpaceX is Elon Musk's rocket company. But when you ask that question, you're kind of asking like, how do they make money? And There are like three different businesses inside of this company. SpaceX.
- [04:52]
Peter Kafka
This used to be a simpler question, right?
- [04:53]
Max Chafkin
Exactly. So it was originally founded by Elon Musk in the early 2000s as a NASA contractor. NASA at the time was looking for basically cheaper ways to get supplies up to the International Space Station. Elon Musk, in. In very audacious fashion, you know, not, not a huge amount of outside belief in this company early on said, how about me? I'll do it. And he built this rocket company that makes a very reliable, relatively inexpensive Way primarily for NASA, also other parts of the Defense Department, also some private companies to send stuff into and out of into orbit.
- [05:37]
Peter Kafka
And this is one of the reasons everyone in tech used to and I think in many of them still do swoon over Elon because they were doing photo sharing apps and stuff like that and this guy was doing electric cars and then rockets and that impressed the heck out of everyone in Silicon Valley.
- [05:52]
Max Chafkin
Yeah, not just rockets but this like very kind of easy to get your arms around business. Right. He's, he's just operating essentially like an airline but for space on a. On a very different scale. Obviously it's you know rockets are much harder to send up and you can't send as many of them and so on. That's one business that is the most stable part of of Elon Musk's entire business empire like even across Tesla and X and the boring company these other ventures that he has going the same time. But SpaceX now has these other additional sort of revenue streams and the most significant one is called starlink. This is a satellite Internet provider. It competes with companies like Via Sat, you know the which does the Internet on your airplane. Although it does so in a sort of very audacious way that allows it to deliver Internet not just to airplanes and to the Defense Department but also to regular people. They have something like nine regular people.
- [06:46]
Peter Kafka
Armies.
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Max Chafkin
Armies, yeah. And so. So it's partly a defense contractor kind of looks in certain ways like Elon Musk's normal rocket business. But then there's this sort of growth industry of adding residential subscribers. No one knows how big that could possibly be. You know I think in getting broadband
- [07:08]
Peter Kafka
to your home delivered by Elon. And that used to be a fantasy and people talked about that for a long time. But there are. It's called what fixed wireless providers T Mobile Vera and so the telcos are now getting into this and now he's getting.
- [07:21]
Max Chafkin
Well satellite Internet's been around forever but as a mainly used for people in rural areas like you live in somewhere where the cable lines don't go. My my in laws for instance. The only way you could get Internet was from companies like Hughes and the Internet was pretty slow. It what you couldn't really upload, you couldn't do video chat. It was and it was pretty expensive. SpaceX because the satellites are lower in space and the Internet essentially works better and there are more of them. It's a, it's a really audacious thing with a huge number of satellites. If you're a astronomy Buff, you know that if you're stargazing now, you will see Starlights, Starlink, satellites all the time.
- [08:02]
Peter Kafka
So he has, he has sending rockets into space business, part of SpaceX that is connected to putting satellites so we can have satellite Internet.
- [08:09]
Max Chafkin
All right.
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Peter Kafka
I kind of have my head around that. But over the last year SpaceX has also become other things as well.
- [08:16]
Max Chafkin
Yeah. So Space X has now merged with this company xi, which is sort of like a overgrown version of Twitter. The company that Elon Musk took over in this, you know, $44 billion acquisition a couple of years ago. He used that to spin up an AI, like an AI chatbot. It's called Grok.
- [08:38]
Peter Kafka
It's famously his version of OpenAI, his version of Anthropic. His, he's entered himself into the LLM fight.
- [08:46]
Max Chafkin
Absolutely. And, and Elon Musk's LLM is, you know, supposedly anti woke. He's his, he's sort of positioned it as, as the right wing version of Anthropic. I would say most of what Grok is used for right now is by people who are on X asking Grok, is this true? It's like a way to dunk on
- [09:06]
Peter Kafka
somebody, but he is inserting itself and he's, he's competing for the same business that OpenAI and Anthropic are compet competing with, with enterprise, with the governments.
- [09:15]
Max Chafkin
Yeah. So you have this super high leverage, potentially like high reward, but extremely money losing company. Xai, just like OpenAI, just like Anthropic, it's losing billions of dollars a year.
- [09:32]
Peter Kafka
And just because you're spending all this money for data centers and all the associated costs and there's very little money coming. And in his case in particular, there's very little money coming in.
- [09:40]
Max Chafkin
Yeah, very little money coming in. And even less, you know, Twitter actually had, as you know, Peter, like not a great, but like an okay advertising business.
- [09:47]
Peter Kafka
Before subscale they were doing about 5 billion a year before Elon bottom now
- [09:52]
Max Chafkin
it's sub, sub scale, it's about half as big as it was, you know, largely because Elon Musk did a bunch of things that alienated the advertisers and we could have a whole conversation about that. But that weird money losing chatbot company is also now SpaceX because Elon Musk merged them.
- [10:11]
Peter Kafka
So he's, he's done this financial engineering to roll up many, but not all of his companies into this thing called SpaceX, which is supposed to go to public sometime later this spring. We don't know what the actual Numbers are yet. He hasn't filed publicly yet. By the time you hear this podcast, he may have done a confidential filing and numbers will leak out. But what you hear bandied about is he wants to raise 50 to 80 billion dollars, which would be the most I've raised in an IPO. He would like the company to be valued at 1.5, give or take, which would make it not the biggest company in the world, maybe one of the top 10 biggest companies in the world by, by market cap. When that IPO eventually comes to market and people can invest in this, what will they be buying? Are they buying the rocket company? Are they buying Starlink? Are they buying the idea that this is a, this is a AI company that they can get in on the ground relatively early, or is it just. It's an Elon company. If Elon is running it, I want to invest in it.
- [11:12]
Max Chafkin
I mean, if the valuation were lower than what you just said, any of the explanations you offered would be plausible. SpaceX, as I said, the sort of rocket part of SpaceX is a good business. It is not worth anywhere near, you know, $2 trillion, which is as high as it could go. You also left out the last bit, which is that if this happens, Elon Musk will probably be a trillionaire. If we get to those high valuations, be the world's first trillionaire.
- [11:37]
Peter Kafka
I'm rooting for him.
- [11:38]
Max Chafkin
I think we all are. The, the thing that people are buying is essentially the wild futuristic visions of Elon Musk. So in tandem with announcing this merger between X AI and SpaceX, Elon Musk said, we are going to build data centers in space. He actually, it's weird as somebody who's followed, you know, I wrote, the first story that I wrote about Elon Musk was like in 2006, it's been a while since I've talked to him, but I knew him for a very long time and, and for all that time, the big goal was Mars. He was everything about Elon Musk.
- [12:15]
Peter Kafka
Colonize Mars, colonize Mars.
- [12:16]
Max Chafkin
We're going to build a Mars colony. And, and that was part of, you brought up the fact that a lot of people in Silicon Valley had, have this, had and have this kind of like extreme crush on Elon Musk. And it, it's really about the, it's the Mars thing. It's like this guy, he's not just building photo apps. It's, it's not just that he's building real stuff. It's that he wants to take humanity to the stars.
- [12:36]
Peter Kafka
He has this big crazy goal. And remember when no one remembers anymore, but you know, remember when Kay said we're going to the moon and it's that sort of like romance of the big swing and we're going to explore and what a cool idea.
- [12:49]
Max Chafkin
Now he's kind of pivoted in the last couple of months. He still says Mars long term goal, but now the goal is data centers in space and a moon colony. And the reason for that, the moon colony is because the US Government is not going to pay for a Mars mission anytime soon. We are doing a very expensive program to bring people back to the moon. So that's that pivot. But the real pivot is data centers in space. This is what Elon Musk does really. He like reads what people are interested in and then he. And what's hot right now and what investors in particular are likely to value highly. And right now that is data centers. There's also this concern and you're seeing kind of like a political backlash to data centers being built in particular places. You're seeing local opposition. There's also, you know, Iran war, we've got power concerns. And so there's all of this anxiety about are we going to have enough data centers and where would we put them? And Elon Musk is offering, I think, what he sees and his and enthusiasts would see as a perfect answer. So there's plenty of room and space for data center.
- [13:57]
Peter Kafka
There's two reasons why that's the perfect answer, right? One is there's kind of some logic. I own a rocket company, I own an AI company, I need data centers. I can put the data centers in space with my rocket company. And you can find, you know much more about this than I do. You can find reasonable people to say that's not the dumbest idea in the world. There's lots of issues with it, but it in theory could maybe work. So there's the, it's, it's tethered to some kind of reality. But also it just sounds like wild crazy, which is something that people like hearing from Elon. And I think, I think whether you're a critic of him or his biggest fan, you say, yeah, he throws stuff out there that's pretty crazy and wild and a lot of it's not going to come true. But some of it has come true. He did build this rocket company. He did build essentially an electric car company from zero and essentially created that market. And you can quibble with all of that, but he's done these amazing things. So before you say data centers in space. That's stupid. Or going to Mars. That's stupid. He might pull it off.
- [14:59]
Max Chafkin
Yeah, that's. That's the theory. That's the theory there. And, and what's also kind of nice about data centers in Mars, as opposed to launching rockets or operating a large residential broadb there. There's no financials really to look at on this one.
- [15:15]
Peter Kafka
You know, one set of things. Yeah, one set of things exist today and the other things could exist one day. So to bring us all the way back to the ipo, when you imagine them selling the story, are they. Are they selling the story of we have a great business today and who knows what could happen in the future, or is it, let's be clear, this is all about future and you're just going to come along for the ride. And people told us that Tesla couldn't support the valuation it had for a car company. And we said, it's not a car company, it's a tech company, just trust. And maybe that's worked, maybe it isn't, but it has worked financially for.
- [15:48]
Max Chafkin
So, I mean, you know, we're still in. Elon Musk is still selling this to investors. So I think to some extent this is an open question, but I think it's pretty easy to answer this because he's done the exact same thing with Tesla. So my expectation is he will say we have a dominant space business, which is true. He has a near monopoly in the launch business.
- [16:09]
Peter Kafka
When. When he threatened to stop working with the. When the. When he had his butt dust up with Trump. And we'll talk more about that later. There was a period where Trump said, oh, we're going off your contracts now, Elon. And Elon said, all right, well, I find I'm no longer going to work with NASA and good luck getting your satellites. And then there was an immediate like, oh, we didn't really mean that we're going to keep working together because literally the US Government depends on his business at this point.
- [16:31]
Max Chafkin
Yeah, it would be hugely disruptive. It's not like they couldn't. They could, but it would be hugely expensive, hugely disruptive, and it would require us to make nice with the Russians, which is the other way you can get stuff to and from the International Space Station. He's saying, we have a dominant business in launch. We have a very good and fast growing business in Starlink. Who knows how big that could get? I think there are real important questions that you could ask about how good this Starlink business is. These low Earth orbit satellites essentially fall back down, they burn up, they won't land on our heads. But you have to keep sending new satellites up pretty much continuously to keep the Starlink network going. It's going to be very expensive to maintain. There are also questions about the bandwidth, like how many customers can this network support and how much better can the sort of the technology for sending Internet to individual people get so you could support, you know, instead of 9 million people, maybe 90 million or 900 million. But he's going to say this is a big and growing business, which is true. And then you have this essentially multi trillion dollar opportunity. And that's kind of that zone is where the Elon Musk enthusiasts are sort of focusing and it's where all the attention is with Tesla. It's why you look at Tesla, his car company, it's had a disastrous couple of years. It was supposed to be this super fast growing electric car company. Elon Musk makes nice with Trump, becomes kind of a right wing influencer troll and alienates a huge number of Tesla's customers. Turns this fast growing car company into a, into a shrinking car company. Growth has kind of leveled off. Maybe it's taking up a tiny bit, but it's lagging. The rest of the electric car industry hasn't released any new products. The company like by normal sort of Wall street metrics, if this were like
- [18:34]
Peter Kafka
a normal company, he said, you have, here's your car company, we're going to evaluate it based on the way we evaluate any car company.
- [18:40]
Max Chafkin
It would be worth way less, you know, I probably would be worth more than GM and for, but you'd have an argument about it because it makes fewer cars than the big car companies. But with Tesla, everybody's focused on number one, robo taxis. This kind of futuristic technology that has essentially been a futuristic technology for like half of my journalistic career, more than half of my journalistic career for like 15 years and is still kind of out there in the future somewhere. And now humanoid robots. Tesla has a, a robot that is that Elon Musk has said is going to be everything from a, you know, a worker in his factories all the way to your friend, your buddy, your
- [19:22]
Peter Kafka
buddy he calls it.
- [19:23]
Max Chafkin
Need normal human friends because you've got your optimist. And again, they haven't sold any of those. There are huge questions about the economics of that, whether anyone wants a robot friend and so on. But that is where investors are.
- [19:36]
Peter Kafka
So the common theme here is there's a thing that exists that you could evaluate as A business, whether It's Tesla or SpaceX, and that's one, that's one thing. And then there's the future. And again, all companies sell themselves on the future. But Elon takes it to a crazy extreme. I'm gonna, I'm gonna make the most audacious claims and prognostications. I'm gonna constantly change what those prognostications are. You may rightfully come back and say, hey, you've been promising robo taxis or self driving cars for years and years, decades now you're not delivering and you go, well, that's, who cares?
- [20:11]
Max Chafkin
Yeah.
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Peter Kafka
And people are comfortable with that, at least as investors.
- [20:14]
Max Chafkin
Well, and as you know, he's not the only one. I mean, the other day Melania Trump walked out in the White House with a robot from a competing company figure, I believe. And, but the thing is, normally when Silicon Valley guys say I'm going to have data centers in space or humanoid robots, that's worth something. But there is a very, very high chance that they'll fail. So, so you know, the valuation is marked down from the potential $10 trillion opportunity to something way lower. And Elon Musk and because he has this huge enthusiast base, you know, the retail shareholders in Tesla, it's a much higher percentage than a normal company. He is like mom, PA investor, Robinhood people basically. And yeah, and mom and pop and you know, Robin Hood guys, it's around 40%.
- [21:04]
Peter Kafka
And he actively courts those folks.
- [21:06]
Max Chafkin
He explicitly courts them. It is a huge part of how he runs the company. You know, know Tesla is sort of like half a normal industrial company and half a meme stock. It's, it's not as meme stocky as AMC or something, but it's definitely like way more meme stocky than Toyota. A lot of, a lot of investors are just buying it because it's fun because they like Elon and so they are not doing a sophisticated financial analysis.
- [21:34]
Peter Kafka
And also stock goes up.
- [21:36]
Max Chafkin
Yeah, and stock goes up.
- [21:37]
Peter Kafka
And so at some point, I mean, I've talked to people who are grown up investors and they say it doesn't really. I can't justify investing in Tesla, except that it would be irresponsible for me not to do this with my client's money because the stock keeps going up. And for me to say this, the valuation isn't supported by the tech and the business. I can be right. But I actually need to be in this company and that is why that company has continued to thrive as a stock. Well, after all, the meme stocks we saw collapse during the, after the pandemic and why AMC is back to being a nearly bankruptcy rep theater company, etc. Tesla has remained undamaged by any of that.
- [22:14]
Max Chafkin
Yeah, absolutely. And, and that is the bet with SpaceX as well. We're, we've, we've gotten some reports that Elon Musk is going to try to get as much as 30% of the initial shareholder base to be retail investors. That's like way higher. I think the normal percentage, about 10%. Not as high as Tesla's retail shareholder base. But the idea will be to take, take this amazing fundraising engine that he built with Tesla, which combines his celebrity, his role as kind of a, you know, like a political influencer and the business celebrity and he is able essentially to move Tesla's stock price almost at will. I think at some point this will break down because you said, Peter, that people feel like they can't afford to invest in Tesla because the stock has just been going up and up and up. But you know, you look at the stock over the last five years, that's not quite true. I mean it is a basically flat over that period of time. Now if you invested in Tesla in 2018, you have done incredibly well and there are moments in there the stock is very swingy. So depending on when you buy it, maybe you've done well. But there are also people who buy into this thing and lose money just like any other kind of meme stock.
- [23:26]
Peter Kafka
We'll be right back with Max Chapkin. But first, a word from a sponsor.
- [23:33]
Max Chafkin
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- [25:29]
Peter Kafka
And we're back. Elon Musk has been able to raise a gazillion dollars for SpaceX. Lots of the people, lots of the institutional investors who are in SpaceX were already in Tesla. They basically say, look, we'll back Elon no matter what. He's already made us a gazillion dollars. Of course we're in there. Elon Musk is the world richest man. He has this publicly traded company, Tesla. Why is he taking another company public? What does this accomplish for him?
- [25:54]
Max Chafkin
It's such a good question because for years I brought up this sort of pivot on Mars. For years Elon has said I don't want to run another public company. He famously tried to take Tesla private a few years back.
- [26:05]
Peter Kafka
That was the 420 funding secured.
- [26:08]
Max Chafkin
He has been adamant that SpaceX should not have to live under the scrutiny of being a publicly traded company. I think there are a couple of things going on and I think this is not unique to elon Musk and SpaceX. It is a good time to take a company public right now, especially if you're an AI company, especially if you are a Trumpy kind of company. You know, we've seen this huge run up. The markets have given it back a little bit, but you know, it's a hot market if you're in AI. It's a hot market if you're connected to the most powerful person on the planet, which Elon Musk is. And so I think it's opportunistic and I think it's about trying to get this thing onto the public market and into this amazing financing engine that he's built for himself before the market shifts, before maybe we see a pullback on AI. Or Democrats are currently favored to retake the House, they may retake the Senate. We saw these kind of of vibes on Wall Street. This kind of Trump trade thing happened and I would not be surprised if, if you start to see a swing Away from that we will see kind of a Trump sell. Right. So he, there, there are multiple factors that could put pressure on the stock market if Democrats retake power. And so I think it's a, it's a good time. I think you could also make an argument that he increasingly like, doesn't have a choice, that the amount of money that he is trying to raise is so big it would be hard.
- [27:44]
Peter Kafka
But why does, does he need to raise the money for the SpaceX business? Does he need to raise the money for the AI business which is very, very capital intensive? And again, there's companies like OpenAI and Anthropic which are generating many, many billions in revenue, are still struggling to keep up to fund that. He doesn't have that revenue coming to AI. Is this, is this something he needs to do to keep that business going?
- [28:10]
Max Chafkin
If Elon Musk were a different person and he had just sort of limited himself to being a nas, he would not need to. That part of the business is probably pretty profitable.
- [28:20]
Peter Kafka
So SpaceX could stay private.
- [28:22]
Max Chafkin
Yeah. And just be kind of the way he used to frame it as this pseudo philanthropic. I just want to help humanity get to the stars and you know, maybe be a defense contractor.
- [28:33]
Peter Kafka
And yes, this is an incredibly valuable business, but I don't need to take it public. There's other ways for me to extract value from it.
- [28:37]
Max Chafkin
What he has said is that if he does that, if he just limited his ambitions, it would take too long, we wouldn't be able to get to Mars or the Moon Moon, you know, in our lifetimes. I think there are still questions whether we'll, we'll see it in our lifetimes, even with the super optimistic version. But what he's saying is to do this we need to, you know, hypercharge it. We need to have a base on the moon, we need to have much bigger rockets. So, so SpaceX is building this much larger rocket called Starship that, that still hasn't really worked. Like they've, they've had sort of partial, successful tests, but it hasn't done what it's supposed to do yet. And that is necessary to make Starlink economical. So Starlink is not economical yet, I don't think. And, and certainly XAI is, is losing, you know, huge amounts of money just like OpenAI and Anthropic. So he, because of his, because of his ambitions, maybe if you're a Elon fan, you say because of his idealism, whatever. He's just trying to make it as big as possible. And he's not, you know, the same thing with Tesla. If he just, just contented himself to run the world's most successful electric vehicle company, you know, Tesla would be a great business. Tesla's car business is great.
- [29:51]
Peter Kafka
He runs a publicly traded company. Tesla, he's going to have a second one, SpaceX. And he runs them in his Elon way. So they are constantly sort of, they're commingling employees and financing and lots of good governance. People would say you can't do any of that. And he basically does it and no one stopped him from doing it. Is there a point where he says actually running two publicly traded companies sucks? Why don't I just combine them all into one mega company?
- [30:14]
Max Chafkin
I mean, he's already floated that, that idea. There were, there were reports, in addition to the reports about Xai and SpaceX merging, there were, there were reports about Tesla and SpaceX merging. So Tesla just had this big event. They are going into the chip business. They're building what he's calling a Terrafab. The, the giga was the old thing. Terra is the new thing. A Terrafab would produce like you chips than the world produces in a year.
- [30:43]
Peter Kafka
Going to build the actual facility that makes the chips.
- [30:45]
Max Chafkin
Yeah, and this is a, essentially like a joint venture with Space X because the chips are going in. Can you guess where they're going? They're going in the data centers in space. So those, those two. And guess who's going to work on the, who's going to build this data center in space? It's going to be Optimus. Your, your friend who's bringing you coffee is also going to be in space constructing data centers. So in a lot of ways is, he's framing the two companies kind of as one company already. And I think that in the long run there is a high likelihood that, that if investors don't revolt, like assuming these IPOs go well and assuming Elon Musk's, you know, sort of business celebrity stays where it is with those are big assumptions. I think they will eventually merge. And, and I say that not only because the, these, these two things are now going to be in business together. And their, their stories are really intertwined not only because the shared, you know, executive structure, the fact that they have the same CEO, but they will have the same shareholder base. You're going to have, you know, the same retail investors who are enthusiasts in Tesla also buying SpaceX. And I think that's one of the big questions about this IPO is like, are there enough of these mega, you know, multi trillion dollar companies.
- [31:59]
Peter Kafka
So we're talking about financial engineering. And then there's what, in what always seemed to be an inevitable. Got two enormously powerful men with appropriately sized egos, extra sized egos. It seemed impossible they could ever share the same space for any amount of time. And they do break up.
- [32:17]
Max Chafkin
Yeah, absolutely. And I think part of it is what you just said. There's an interpersonal dynamic. There's also the fact that Tesla sales were cratering at the time. So I think.
- [32:26]
Peter Kafka
So the work that Musk was doing
- [32:28]
Max Chafkin
to promote Trump was incredibly unpopular with his customers.
- [32:32]
Peter Kafka
And in a way, and because I, you know, I focused on Twitter, which we came at, and you could really see Elon Musk destroying the value of the thing he bought, telling advertisers to go themselves and, and really pushing away a big core of Twitter users. And the, to this day, the business has not recovered from it. You can, you can argue that it's still an important platform. That's fine. But he went ahead and basically said, I'm going to emulate this business. I'm going to set it aflame. And I could not do that. I could not say terrible things or upset people, but I'm, I'm going to go ahead and do it. And didn't care. But with Tesla, it seemed like a lot of what he was doing did directly affect his business.
- [33:15]
Max Chafkin
I mean, he was doing what he did to Twitter advertisers, but to Tesla's car buyers.
- [33:20]
Peter Kafka
Right. And essentially, particularly in Europe, but in the US people said, I don't, I don't want my car to be a billboard for Elon Musk.
- [33:27]
Max Chafkin
You think about who buys an electric car. I don't think it's as liberal as you might imagine. There are lots of Republicans drive electric cars, but it's very urban. It's a thing that in suburbs, basically,
- [33:40]
Peter Kafka
it's a blue state, blue city kind of thing.
- [33:43]
Max Chafkin
And even the Republicans who are buying Teslas are not into the most extreme parts of Trumpism. It was like he was staking out a politics that was so far removed from where his customers were and doing all these incredibly controversial things to the point where, point that there were protests, you know, in front of Tesla stores. Tesla stores were getting like, attacked in Europe.
- [34:04]
Peter Kafka
And, and this is why you, you have Trump and Elon, while they're still buddies, literally putting Teslas on the White House lawn and doing a sales promotion.
- [34:11]
Max Chafkin
Well, and then the other thing that happened is, in addition to being super unpopular with Tesla's customers, what Elon Musk was doing in government was also started to become clear that it was unhelpful to Donald Trump. And I think that's why Trump starts to push Elon away. You hate had. There's probably a version of Doge that would have been really popular. Americans like the idea of making their government more efficient. But what Elon Musk was doing was essentially taking government workers and humiliating them. And, and, and that I don't think was popular really with anyone except the really sort of most ideological parts of the right.
- [34:47]
Peter Kafka
And the thing about coming in and saying we're going to cut a trillion dollars from the budget, which was never going to happen anyway. But if you, the point is, if you come and say we're going to cut mass, massive amounts of the federal government out, you may hate in your mind this part of the government or that part of the government, or you imagine a government worker is a certain kind of person you don't like. Eventually we'll get to something you care about.
- [35:07]
Max Chafkin
Yeah. And that something is Social Security. There's no way to do make those cuts without, without cutting Social Security. And Musk made a bunch of comments, again, super politically unhelpful, where he called Social Security like the greatest Ponzi scheme. You know, it's the third rail in politics. Anyway, Musk also got involved in this Wisconsin special election where it sort of became clear that his involvement might have been one of the factors that cost the Trump aligned candidate to lose.
- [35:36]
Peter Kafka
So he was. The idea of Elon Musk going to Wisconsin and holding these rallies which were well attended, was actually a net negative.
- [35:44]
Max Chafkin
I mean, it's, you know, the story that the Democrats have been telling since Donald Trump's election is about, whether you use the word or not, is about oligarchy. It's about this kind of like, as they see it, unholy alliance between the corporate class and Donald Trump, where the corporate class is, is bringing down workers and, and like going to Epstein's island and, and, you know, doing all this bad stuff and Donald Trump is getting rich off of it. And Elon Musk among the opposition became the avatar for that. The most visible because he spent the most money because he was literally having a sales pitch on the South Law, the White House. And so it just became this incredibly toxic thing, not just for Elon Musk, but also for Donald Trump.
- [36:30]
Peter Kafka
So this alliance backfires sort of for both of them. And again, not surprising that Trump would move on at some point. What surprised me is, and I follow it closely, but not as closely as you do Is it sort of seemed like Elon Musk seemed to take the advice that everyone was giving him and saying, you should just shut up a bit or it's impossible for you to shut up, but you should be less loud. And initially, when he left Doge, he held a series of interviews and told everyone, I'm going to be less involved in politics now. I'm going to go back to focusing on cars or whatever it is. And I don't think that's true. But on the other hand, he does seem to have, I don't know if it's intentional or not, and you tell me, reduced his public profile. In the last year, I think think
- [37:17]
Max Chafkin
his public profile has been reduced. I don't know how much of the, like, you're right. That he said he signaled less involvement in politics, but if you look at his X feed, it's still full of the, you know, same racially provocative, politically provocative, troll, sexually provocative. Remember, there was this whole thing where Grok introduced a bot that would, you know, not just take people. People's clothes off. And Elon Musk was kind of on ex laughing about that. I think the main thing is that the sort of center of the media universe over the last year has been Donald Trump. And there was a time when that included Elon Musk and now it doesn't.
- [37:57]
Peter Kafka
So you think that's you and me in the media. And then just regular people said, we've, we are just done paying as much attention to Elon Musk or we're no longer, as, I mean, you can only sustain interest in anything for so long. And we sort of had our run with him.
- [38:11]
Max Chafkin
I don't think it's immediate driving. I think it's, it's a. Its people being more interested in the reality show that is the White House than the reality show that. That is Elon Musk's X feed. And as long as Elon Musk is not getting into a big fight with Trump or involved in the Trump show in some way, then he's able to be somewhat under the radar. I also think maybe there's a bit of fatigue. Like, how many times can you be outraged over kind of like a white nationalist tweet? I don't know. At a certain point you're just like, yep, that's, that's what he does.
- [38:42]
Peter Kafka
Yeah, there's a, a great Guardian piece that came out in February and just said, we just looked at everything. He tweeted for a month in January when he was supposedly low profile and supposedly had maybe learned his lesson about angering politicians and customers, and it's just straight up race war stuff that he's basically publishing every day. And he would argue that it's not that, but most normal people would look at that and go, this is kind of revolting. I don't know anyone who would want to do this, let alone someone who has real power and real consequences for, for putting this stuff out. But he's gone ahead, done it.
- [39:12]
Max Chafkin
Yeah. I mean, I think he has. Much like Trump, honestly, where he's achieved kind of a place. He has a fan base that essentially looks past the stuff that is norm breaking or weird or troubling or all those things all at once, and they've just decided, yep, that's who he is. And I honestly think for a lot of them, you know, it's part of the appeal. Part of the reason he has this huge base of, of, of fans, admirers, investors, isn't just that he's, you know, the one tech guy who's doing ambitious stuff. It's that he talks like a normal person. It's like Donald Trump. It's the.
- [39:49]
Peter Kafka
He doesn't really talk like a normal person. If you hear. But he, he tells people like you and me, fuck off.
- [39:53]
Max Chafkin
Yeah.
- [39:53]
Peter Kafka
I don't care about what you have to say.
- [39:56]
Max Chafkin
I, I think, yeah. I mean, first of all, if you've met Elon Musk or seen him on tv, he is not a normal person. He, he is profoundly awkward. You know, he's unique. I'm just saying he is perceived to be unfiltered.
- [40:09]
Peter Kafka
Right. In that same Trumpian way.
- [40:10]
Max Chafkin
Right, Exactly.
- [40:11]
Peter Kafka
Like, I'm gonna say what I believe. Maybe it's not what I believe. And maybe if it's something I'm gonna say, I'm gonna say a different thing tomorrow. But this is coming from my head, out of my mouth to you. This is what I am.
- [40:21]
Max Chafkin
There's incredible power in that. And I also think this skill is arguably less important than it used to be. Is like Trump, he's really good at Twitter, he's really good at the short form text social network thing. And, and, you know, that's. I think that's part of what led him to buying the platform in the first place. But, you know, he's good. He's good at being a celebrity in 2026, and he's good at leveraging that celebrity to make money and do the things that he wants and attack his enemies and so on.
- [40:50]
Peter Kafka
We'll be right back. But first, a word from a sponsor.
- [40:54]
Max Chafkin
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- [41:11]
Peter Kafka
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- [41:41]
Max Chafkin
Hi, I'm Brene Brown.
- [41:42]
Peter Kafka
And I'm Adam Grant.
- [41:43]
Max Chafkin
And we're here to invite you to the Curiosity Shop, a podcast that's a place for listening, wondering, thinking, feeling and questioning. It's going to be fun. We rarely agree, but we almost never disagree. And we're always learning. That's true. You can subscribe to the Curiosity Shop on YouTube or following your favorite podcast app to automatically receive new episodes every Thursday.
- [42:12]
Peter Kafka
I spent a ton of time using Twitter, thinking about Twitter, writing about Twitter, made a podcast about Twitter I still use. Seems to me to be less central to discourse than it used to be. Still important. Is it important to him to own Twitter? You know, he, he explained how he sort of used that to lever himself into an AI company. But beyond that, is there, is it meaningful to him as a business?
- [42:46]
Max Chafkin
I mean, we spent people who were paying attention to this especially paying attention to his destruction of Twitter or what felt like his destruction of Twitter for like, what was it, a couple years, thinking like this is an incredible destruction of value. He's just lighting money on fire just kind of for the fun of it or something. And I think you have to look at it as an incredibly successful acquisition, an incredibly successful business maneuver, not only because he realized, and this was pretty smart, that Twitter's sort of real time feed would be a good way to build a large language model off of and that if you controlled that, you
- [43:28]
Peter Kafka
would have an important big data set. You own it.
- [43:30]
Max Chafkin
Big data set that is crucially up to date, right? That's one of the big problems with, you know, scraping Google or scraping, you know, any other site is the open
- [43:39]
Peter Kafka
AIs of the world all need to some degree some new information and in some cases they have to pay for it. In some cases they're not able to get it because they're blocked from it.
- [43:47]
Max Chafkin
And I don't know, you know, X is way behind OpenAI and Anthropic, but it still is an important asset and it's allowed him to get a very high valuation and to pay back the investors who lent him money to buy Twitter. The other thing it did is by transforming Twitter from being kind of this media centric place where celebrities and it
- [44:11]
Peter Kafka
was a blue state operation. That's how it's. Because it was subscale. The people who sold ads for it couldn't say, you're going to reach everyone in the world. They said you're going to reach a certain kind of person, probably the kind of person who buys a Tesla or,
- [44:22]
Max Chafkin
or the kind of person who is influential in policy circles or whatever. It was a way to, to, to reach elites as an advertiser. And he's transformed it into being this right wing social network. And I, I agree that when you say, well, how influential is Twitter today on the culture? Culture, it's, it's not very influential at all. Like, you know, TikTok of course is like where it's at or even reels, but within conservative politics, it is the dead center of the world still. It is like if you are paying attention to conservative media, Twitter feels exactly like it did like in 2011.
- [44:59]
Peter Kafka
And there are other parts of that because Twitter is lots of different things to lots of different people. It is where all of the AI discussion happens. Like all the people who are building, investing in AI, that is where they are hanging out.
- [45:10]
Max Chafkin
Yeah. And so, so it's true that it's become less influential, you know, maybe broadly, but its influence in certain elite areas, including conservative politics. In fact, the areas where like Elon Musk cares about it is arguably more influential. And he is, you know, it's, it's elevated him in a way that I think is difficult to imagine. So, so even today, if you were running for like in a house race or something, you want to raise some money, you want to get on the radar of, of, you know, big donors. You could possibly do is get Elon Musk to reply to one of your tweets. I mean they're probably other things, but that is, that's going to be high up there. You look at all these kind of like up and coming right wing politicians. They are, they are so online, they are on X, you know, all the time. And you think about like Tucker Carlson. Tucker Carlson essentially got thrown off of Fox News and, and his show and went to X. It looked, it looked like, okay, this, that's the end of Tucker Carlson.
- [46:07]
Peter Kafka
That's exactly what I thought. I thought that as well. He's never going to recreate the reach that he had on Fo. And if he had any chance to do it, it wouldn't be on Twitter, it'd be on YouTube or TikTok.
- [46:18]
Max Chafkin
Now he doesn't, I mean, he doesn't have the broad cultural reach that he once did, but he has a huge audience and that. And, and so. And he is all over X too, you know, and of course, now he's mainly on YouTube and. Because X, as you say, is subscale. But. But he really used that and sort of use that ecosystem and is central to that ecosystem. Like, I don't think Nick Fuentes is a major force in, you know, sort of political culture in this country without Twitter.
- [46:42]
Peter Kafka
No. And there's Nick Shirley. Not even going to put air quotes around investigative journalists. The troll who created the what's going on with the Somalis in Minnesota story last year, which got to. I mean, that became a huge story on Twitter, slash X, which led directly to invading Minneapolis, etc. So these things have real consequences. We started off by talking about the ipo. We've explained why Musk is so good at financial engineering and also engineering. Engineering, and why this looks to be an enormously successful ipo. What, what, what is the downside risk for him if something goes wrong in the next few months and the IPO can't happen or is less successful than he thought? Is, Is this existential for him or is it a road bump?
- [47:29]
Max Chafkin
Okay, so one thing, one part of this answer has, is going to be true about Elon Musk. It has been true before, it will continue to be true. And then another part is specific to this moment. But his empire, as big as it is, as valuable as it is, it is more fragile. Fragile than I think anyone realizes. It is interlocked. And it's dependent on this celebrity, that and this, this continued belief that people have that there are no, there's no guarantee that that lasts forever. And, and I think, you know, the nature of celebrity is that it doesn't last forever. And so at some point that will be threatened. And I think we saw a little bit of that with Elon Musk's feud with Trump, where, where I think as much as it would have been bad, bad for the United States of America if, you know, if he had stopped supporting the International Space Station, bad for the world, too. It would have also been disastrous for his companies. Because getting crosswise with Donald Trump, part of why he's so erratic and why he's always doing these bold things, because he is just. He's being chased by reality always and has been for his entire career. And he's been able to do enough things and build his company. And that's part of what's made it an amazing story. The second thing is, thing is, you know, the market does not feel particularly stable right now. And the, the, the way that, the way that we're valuing AI companies, I don't think there's any guarantee that that stays stable. And so I think part, I think he needs to get this thing public and to, and to be able to do this before either there's an AI bust or an AI correction or whatever. Whatever. Or before there's a political shift, because a political shift could really hurt him. If you look at the prediction markets, people think that Democrats are likely to retake the House in November. About a 50, 50 chance on the prediction markets of Democrats retaking the Senate. That happens. We're going to have two years of essentially hearings. Democrats won't be able to do that much in Congress, but what they will be able to do is hold hearings about Donald Trump and all and cabinet members and possibly Elon Musk. And there is going to be a level of scrutiny on the parts of his empire that are connected to the government that I'm not sure he has had to contend with yet. And that's going to be a challenge. And that's one of the reasons why getting to the public markets, being able to have a bunch of cash, being less dependent on federal contracts would be very good for him.
- [50:06]
Peter Kafka
This is a consequential window and we got the right person to explain why, why that was the case. Matt Shavkin is awesome. You can read his stuff at Bloomberg. You can listen to him on everybody's business. Excellent podcast and we'll have him back on the show.
- [50:18]
Max Chafkin
Thanks, Peter.
- [50:21]
Peter Kafka
Thanks again to Max. Great to see him again. Thanks to my producer Charlotte Silver. Thanks to our advertisers. Thanks to you guys for listening. See you next week.