Loading summary
Transcript201 lines
- [00:00]
Chamath Palihapitiya
All right, we are talking SpaceX IPO, the biggest IPO of all time. And there's a lot of smart analysis out there. This ain't that, Sam, what did you call it? The. The two guys in a truck version of this. What did you say?
- [00:16]
Sam Parr
Two idiots and an S1.
- [00:17]
Chamath Palihapitiya
I feel like I could rule the world. I know I could be what I want to.
- [00:22]
Sam Parr
I put my all in it.
- [00:23]
Chamath Palihapitiya
Like, no days off on the road. Let's travel. So this is for. Look, there's going to be people who are smarter, wealthier, more technical than us that are explaining SpaceX, but we promise to be the most relatable analysis you're going to get. Because I wanted to nerd out on this myself, I was like, should I be buying this ipo? Should I be buying this stock? And in order to do that, I was like, okay, let me sit down for a couple hours and just try to understand what even is this business? How does it work? Is this massively overrated? Is it underrated? How should I think about this? What do they even do? And so that's where I spent some time. Sam was picking through the S1, trying to find some of the more interesting quirky. People aren't talking about this, but check this out. Style nuggets. So that's what we're going to try to do in the next hour or so.
- [01:11]
Sam Parr
I'll just play the character. It's all acting. But what would you say SpaceX does?
- [01:18]
Chamath Palihapitiya
Okay, so SpaceX, what do they do? SpaceX builds rockets. I think that's the primary thing that they do. They build rockets, ideally rapidly reusable rockets. And they could take stuff into space. Space. Now why do you want to take stuff into space? Well, one version of take stuff into space and the origin of the company is let's take man to Mars. So how do we become multi planetary as a species? That was the, you know, way, way back, that was the original mission, still, you know, a part of the mission. And I guess the, the origin of that was that they, you know, Elon, after he sold, I think it was PayPal. After PayPal sold, he made a few hundred million dollars, $200 million or so. And he was interested and excited about when NASA was going to go to Mars. Oh, I wonder where the Mars mission is at for NASA. And he goes on the website, he looks it up, sees nothing about a Mars mission. He's like, wait, we went to the moon in whatever, 79. We have nothing planned to go past that.
- [02:13]
Sam Parr
Like he's planning a vacation he's like, hey, so, like, I have some free time. Let's see if we can, like, take the kids to Florida and, like, watch, like, a rocket take off. How cool would that be?
- [02:22]
Chamath Palihapitiya
Exactly. And so he was looking at that, okay, it's not happening. So then he thought, oh, man, you know, going to space, going to the moon, that's a very inspiring thing. What if we funded a mission to take. I think it was like, a plant. It's like a little succulent or something into. Into space. And it'll, you know, let's take life to Mars. Life, technically speaking, because it's a plant. And he thought, oh, that'll just generate some excitement, some buzz. It'll kickstart more enthusiasm around space. And that was the original idea. He goes to Russia, he tries to buy rockets from the guys in Russia, like an old ICBM missile, basically. And they laugh at him. They sort of spit in his face. He realizes, like, oh, shit, after two trips to Russia, this ain't gonna work. And like any good entrepreneur does, doesn't take no for an answer. Like. Like any stubborn genius does. He decides, I guess I'll build my own. He took that personally.
- [03:16]
Sam Parr
Dude, when I was a kid, during Fourth of July, like, or like, for some holiday, we would drive over the river to go to Illinois because they sold bottle rockets there and they didn't sell them in Missouri. Elon and I are basically the same thing.
- [03:27]
Chamath Palihapitiya
Same shame.
- [03:27]
Sam Parr
Just if he is, you know, he's 200 million times richer and 200 IQ points higher, but very similar.
- [03:36]
Chamath Palihapitiya
But I relate. Yeah, if you have SpaceX, so do you know their business model? What do they actually do?
- [03:47]
Sam Parr
When I was reading through the S1, one of my big revelations was they do so much stuff. And frankly, I don't entirely know how it all contributes to the same thing, but I do know that the main reason why he started was that reusable rockets is the best way to make going to space to happen, because you can make things cheaper.
- [04:08]
Chamath Palihapitiya
So they. Yes, that's correct. So they have, let's say, you know, three core components here, or I should say, four. So they have launches, they have starlink, they have X the Artist Formerly Known as Twitter, and then they have XAI. And those four are the four components of what SpaceX currently does, with some new things coming online. Like they have something called the terrafab, where he's building, like, the largest chip factory in the world. So that's like, you know, what are the chips?
- [04:45]
Sam Parr
What are the chips going to be
- [04:46]
Chamath Palihapitiya
used for their own rockets, his, their own AI. So basically he's got Xai, which is his AI company, and Terrafab is basically his way of getting ahead of what he believes is like the chip bottleneck in the world, which is there needs to be more chip production, ideally in the United States. So again, if the current manufacturers of chips are already booked out five, six years in advance, already at capacity, and the world needs more chips for AI, we'll go ahead and build the largest chip factory in the world, the Fab Sarin.
- [05:20]
Sam Parr
My wife and I, we took a road trip and we stayed at a motel and they only had rooms with two twin beds at the Motel 8. And she was sad, she was like, I want to sleep in the same bed as you. It's so weird. And so I just got rid of the middle drawer and I pushed the two twin size beds together and I said, I, we don't need a king size bed. We have a super bed. And that is sort of what Elon has done with this company. You know, it's all of these. He's just made a super bed that's
- [05:46]
Chamath Palihapitiya
his, except he kind of put like one of the, you know, like, what's the little, what's the little footrest thing called? That's like Twitter. He's like, yeah, it'll just be here at the bottom. Because the only downside when you look at the analysis of this thing is that, you know, Twitter revenue is like half of what it was when he bought it. So that one hasn't really worked out. But he, he rolled it together with all this other great stuff so that the investors did well, even though that business didn't do so hot since then.
- [06:09]
Sam Parr
So super company. Let's hear super company.
- [06:12]
Chamath Palihapitiya
The company's going public right now. It's the largest IPO in history. I believe it's going public at $1.75 trillion, which is very polarizing because you have on one side people who are rational, logical creatures who look at this and say, wow, so it's a hundred times revenue. Like, that's pretty insane. What are we buying here? Exactly. And on the other side, you have the cult of Elon and you have people who are bullish on the future of technology who just believe that like in Elon we trust. And it's not about the price to earnings ratios, it's not about price to sales, it's about, you know, the price to Elon ratio. And if it's an Elon company, you're going to have 10 times the price you would probably otherwise have in a company. And so it's a very interesting company that's going public because it's so huge and you have people who are so passionate on both sides, like a sports team or like a religion. And I guess the idea here is, can we try to understand what's actually going on and maybe come to our own conclusions?
- [07:14]
Sam Parr
So just to put this in context, the word trillion has been thrown around a lot. You know, anthropic is about to go public or something like that. You know, it's worth around a trillion or 900 billion. Same with OpenAI. The word, this word trillion is being thrown around a lot. And I want to put this into context because a trillion's really, really hard to understand. A billion's hard to understand. A million, a lot of people can understand that. So a million, if it were seconds, a million is 11.5 days. A hundred million, which is an astronomical number. Let's say, if you have a hundred million dollars, if you have a hundred million dollar company, that's a really big company, that's 3.2 years. If 100 million seconds, a trillion is 32,000 years. Isn't that incredible? It's hard to fathom how large a trillion is.
- [08:05]
Chamath Palihapitiya
That's what I'm saying. And. And when this IPO happens, Elon will be the world's first trillionaire, on paper at least.
- [08:11]
Sam Parr
And we're talking 2 trillion. 2 trillion, right. So that's 60,000 years if it were seconds. That's a lot. That's so, that's so large.
- [08:20]
Chamath Palihapitiya
So, okay, so let's explain a little about the company. So, hey, I want to tell you about something pretty cool. We have a database of all of the unsexy business ideas that have been discussed on this podcast. So hundreds of episodes the team at HubSpot went through. They pulled out all the unsexy ideas. So not the super high tech ones, but the simple, relatable, interesting, profitable ideas that we have brainstormed. And they're all available for download for free. Just click the link in the description below. Thank you to our friends at HubSpot for sponsoring this podcast and putting together this free resource for you guys. Back to the show on the different dimensions that I mentioned. Launches, they dominate. They're like the Google search of launching rockets. They launch, I think something like 80 to 85% of all the payload that goes into space goes through SpaceX. There might be a second. Yeah, there's a second place technically, but the gap is so large and so they dominate the launch category. Now, what do they launch? They take satellites up into space. They take satellites for the government, but they also, I think about 40% of their launches are just for their own satellites for this product called Starlink. So if you don't know what Starlink is, Starlink is basically Internet service. Specifically, it's really great at giving you Internet in places that have shitty Internet. So rural areas, remote areas, countries where the infrastructure gets damaged or blocked during wars. Starlink basically gives you Internet anywhere. It's great for airplanes, it's great for boats. Anywhere you can have Internet that's traditionally quite difficult to get. And this Starlink business is gangbusters. So it is basically up, like, you know, it's quadrupled in the last two years. They have 10 million paying subscribers to Starlink Internet. It makes like $11 billion a year in revenue. It's like 40% EBITDA margins. It's recurring revenue. So the Starlink business has, like, all of the wonderful characteristics of a business. There's no competitors. They have an extreme cost advantage. It's recurring revenue. It's extremely high margin. And it's a product that everybody on Earth, you know, essentially needs is the Internet. And they specifically solve the problem in rural areas. So Starlink is very, very interesting as, like, that's the cash cow of this
- [10:26]
Sam Parr
business, which is new. It's only like four years old, I think.
- [10:31]
Chamath Palihapitiya
Only like four years old. And there's, by the way, it's some crazy story about how, like, the Star League team, they worked in Seattle and the project was kind of going nowhere. So he's like, getting status updates and he gets really frustrated one day and, and then he goes like, you ever seen that episode of Entourage where Ari Gold walks into the office with a paintball gun and just starts blasting people that he's laying off? That's basically what they did to the Starlink project. They went there and they just were like, what the hell is going on? Nuked. Everybody restarted from scratch. And then, you know, it now is like one of the greatest sort of businesses in the world. Right now is just the Starlink business unit inside of. Inside of SpaceX.
- [11:09]
Sam Parr
Okay, so that's. That's easy to understand. That's. That's pretty straightforward. That's easy to understand.
- [11:13]
Chamath Palihapitiya
And then they. And. And you might think, okay, well, how big is this sort of rural Internet thing? Well, in the US there's, you know, probably tens of millions of people who, who will be subscribers to this, maybe like another 30, 40, 50 million on top of the 10 million that they already have. But then you have all around the world, you know, there's huge, you know, 50% of the Earth basically has shitty Internet coverage. So we're talking about like parts of Africa and India, whatever. Now the problem is those people don't have a lot of money. So they're not paying the same kind of thousand bucks a year that people in the US are paying for Starlink. So there's a question about what that's going to be worth. But then they have this other thing called direct. Direct to sell. You know about this?
- [11:48]
Sam Parr
No.
- [11:49]
Chamath Palihapitiya
Okay, so direct to sell is basically if you've ever been, you know, driving and you're like, oh, I just hit my call dropped. I hit a. I had a dead zone. Yeah, right. Maybe you're driving on a bridge or maybe you're just like, oh yeah, this one area on my route to work always has like shitty service. Well, they basically can now do Starlink from the satellite direct to your cell phone. So you don't need the little satellite dish like you need for the home Internet service. You don't even need that. It just goes straight to your phone. So they partner with T Mobile, for example.
- [12:19]
Sam Parr
And so in areas where you have
- [12:20]
Chamath Palihapitiya
crappy reception, you'll still be able to send text messages, you'll still be able to download some data, you'll still be able to make a phone call. And so they're basically looking at this like whether they launch their own T Mobile, right? They launched their own Starlink. Just that's what you use for your cell phone plan. Or it's this little add on to every cell phone plan on earth where it's like, oh yeah, and for an extra three bucks a month, five bucks a month, ten bucks a month, like you just have guaranteed coverage everywhere. When you don't have good service, it falls back to satellite service. And so they're like, yeah, that's going to be pretty big because there are, you know, the market for, you know, Internet services across cell phones and home Internet is like $2 trillion or something. And they actually have. And by the way, there's no differentiation really between any of these. If you go to t mobile or AT&T or whatever, they're all Verizon, they're all essentially the same.
- [13:08]
Sam Parr
Which commercial do you like best exactly? Yeah, it's all the same thing.
- [13:13]
Chamath Palihapitiya
Who like, you know, is Patrick Mahomes like your favorite player or you hate him? That's going to decide who you go with. And so they're the first ones to Go into that space with something that's actually a different proposition which is like hey, our service works everywhere. Those don't. And secondly, you know, it can be lower cost because of the way they're doing it in, in, in space they don't have to do ground build outs of towers. So that's kind of like the, the kind of core business. They got so good at launching rockets that it became cheaper and cheaper. I think they basically brought the cost of taking like a kilogram to space down by 50 or 100x what it was pre SpaceX. So they have like a, you know, if it cost $100 before, it now costs one or $2. Right. As an equivalent of like the biggest, how big the cost drop was. And they keep doing that. So wherever they are today, when they have their new rocket starship, it's going to be half of what it currently is. So they're just like a, have a massive cost and volume advantage and launches that lets them have the satellite business, which lets them have Starlink. Okay. So that's kind of the business as it is today. Then you say, well, what's the next unlock? And if you look at their investor presentation, it's all about data centers in space. And you're like, you know, when you hear this you think, I don't know what you think. What the hell, you know, you think about like literally a building floating in space.
- [14:29]
Sam Parr
Yeah, it's hard to fathom. I think like we're colonizing the moon or Mars or something like that. But I also think like is there not enough room here? Like it's, it's sort of, it's, it's unfathomable. So that, that's hard to understand.
- [14:42]
Chamath Palihapitiya
The answer is we got plenty of room. It's hard, it's a little slow to build and expensive to build. And there's some shortages like in turbines and things like that to build. But the real problem is literally just red tape. It is easier to figure out how to launch the heaviest rocket ever and take and build a data center in space than it is to get like, you know, Alameda county to approve of a data center in your backyard. That is literally the problem. That is there is so much regulation and so much anti data center backlash that the people who even have the money and the engineering chops and the power and the reserved equipment to be able to build, they can't build in the United States, which is kind of insane.
- [15:28]
Sam Parr
Well, you know what's really so think about this. So I'm a history Nerd. So one of the reasons, one of many reasons why the American Revolution happened was when American colony folks, they started taking over what is now America, they started going further and further out west, and they started having a lot of fights with Native Americans. And the colonists were like, hey, England, like, we need some help. You're supposed. We're supposed to like, be your country. Come protect us. And England's like, dude, it's so far away. It takes us four weeks to get there. And plus, once you're there, it's like 3,000 miles long. We can't do this, you guys. I know we said that you can go everywhere else, but please, you gotta come back in. And George Washington was like, no, this is my land. This is my land. You're not going to tell me what to do with my land. Screw you guys. And that was one of the reasons why there was tension. And it sort of begs the question that when you go the figurative wild west space, when everyone's doing their own thing, what's going to happen in 50 or 100 years when people are like, okay, now we actually have to, like, rein this in. What are we going to do? Who gets what? Because. And that's actually another thing that's quite challenging to understand. It's sort of like sectioning off the ocean or water or something like that. Like, who gets what spirit area of space or Mars or moon?
- [16:40]
Chamath Palihapitiya
Well, the moon, I think, definitely. Right. Because it's actually like a limited land area versus space, which is, you know, the biggest thing.
- [16:49]
Sam Parr
I don't know. I don't know enough about this to know, like, what's true. But, like, are there, like, highway routes that satellites take where it's like, you know, this is the best. This is like the best route. And like, you know, we can only have so much, like, debris in this.
- [17:02]
Chamath Palihapitiya
I don't think so. I mean, maybe, maybe there's some future state where space travel is so cheap and easy that so many people want in and the demand is so high that now we're running out of space in space. Like, maybe. But, like, that's not the problems today. The problems of today are, wow, it's really expensive and hard to get permitting to build on, on land. So it's, it's such a, like, I'm gonna take my ball and go home. Or just like the, you know, men will do anything to avoid therapy type of conclusion, which is go to space. Well, I guess we'll just go to build in space then. I don't even want to talk to Like, I want so little to do with politics that I would, I'd rather build this in space and figure I'd deal with the engineering. So the big risk of this company right now is two, two questions. The first is, are they going to be able to build something called Starship? It's like their big ass rocket. Bigger, way bigger than the Falcon 9. And so I think it carries like seven to 10 times more payload than the Falcon 9. And so if you know, Falcon 9 is bringing up what, let's call it 10 satellites at a time, this thing will bring up 70 satellites at a time. And so they haven't yet been able to get Starship to work. They're building it, they're testing it. It's taking years when they do it. It'll be the most impressive rocket and probably the most impressive feat of engineering in human history. But there's a question of if. So some people might not believe that they'll ever get Starship to work.
- [18:27]
Sam Parr
That tends to be a foolish bet.
- [18:29]
Chamath Palihapitiya
Yeah, betting against Elon's technical ability has proven to be like the most unprofitable bet you could make. Even if you're right for a year or two, you're eventually wrong. And so one question is, is Starship ever gonna happen? And can they make it rapidly reusable so that it could fly? Like, he was talking on a podcast and he was talking about it like, yeah, we're gonna do whatever, 10,000 launches. And the guy was like, so wait, so that means like you're launching like multiple times a day, obviously, right? Like you're launching 30 launches a day. And he's like, yes. And they're like, but you can't even launch one right now. He's like, yes. And they're like, so it's going to be. And he's like, it's like an airport. You know, how many times a plane takes off a day? And he's like, we are going to launch that many times in a day. It'll be like airports. It'll be, you know, we figured out how to make cars reusable, how to make airplanes reusable. We are going to figure out how to make rockets rapidly reusable. So you can land, turn it around, launch it again. Land, turn it around, launch it again. Just like airplane lands, they clean out the, the, you know, get your crumbs off the, off the seat and then they go. And, you know, 45 minutes later, it's up in the air again. And that's like a key part of how Air travel became cost effective, they're trying to do the same thing with rockets. And so one bet is, is the starships thing ever going to happen? And then if so, there's another set of doubt or risk or uncertainty which is, can you even do data centers in space? This is even going to work. And there's people who argue that, you know, one of the reasons you put it in space is not just the red tape, it's the cost. So basically one way of thinking about this that Elon talks about is that the entire game is taking energy from the sun and turning those like photons basically, or electrons into tokens for AI. That's kind of like the pipeline, that's kind of the world. Where the world is going is we are going to need an insane amount of AI tokens. Whether that's for ChatGPT, like things, whether that's for digital employees work that's being done, whether it's for science and medicine, whether it's for robots, like we're going to need a shit ton of AI in the future. It's pretty hard to bet against that. So then the question is, who could be the low cost provider of tokens? And basically, if you look at, when you have a satellite in space, it's powered by the sun, you don't need any cooling because space has like, you know, space is basically freezing cold and has like a radiative whatever cooling mechanism where as the chips get hot from being used, there's like a natural physical mechanism to cool them down. Some people argue against, but Elon believes it's no problem and that basically streaming AI tokens from space is going to be far cheaper and more effective than any land build out of data centers and then figuring out how to, how to transmit those. And the physics, the paper, papers, the question is, can they build it? And historically Elon is very good at doing this. He's very good at taking no market risk. Meaning if I could make this, you'd want it, right? And it's like, yes. Then the only question is, can I make it? And the answer for him has always been yes. And so that's kind of where we're at with this business.
- [21:34]
Sam Parr
This string of letters that we're putting together to make words into sentences is like the words that are coming out of your mouth right now are, are wild. To me, I just, it's like, I'm
- [21:45]
Chamath Palihapitiya
just like learned German yesterday.
- [21:47]
Sam Parr
Like, it's just the fact that language has changed so much that in the last five years it has come to the point where we are now saying we're going to go to space to create AI. Like, imagine explaining this to someone. There's this old man that I hang out with in my building who's 96 years old. And every time, every once in a while, I go down to his room and he tells me, like, where he was when JFK died. And he'll tell me cool stories. Just imagine, like, explaining this to him. It's like, well, it's just crazy how fast humans progress.
- [22:18]
Chamath Palihapitiya
You're. How old's your daughter? She's two.
- [22:20]
Sam Parr
Yeah.
- [22:21]
Chamath Palihapitiya
Okay, so you haven't quite reached this point, but like, my kids are like, how does TV work? And I'm like, honestly, I have no idea. And, you know, they're like, you know, so wait a minute, so this is happening right now somewhere else? I'm like, yeah, there's a guy with a camera. How does the camera work? Couldn't really tell you, but he's got something called a camera and that sort of gets like piped into, like those towers. There's like cables on the road. You see those? There's like satellite. And like, there's wifi. That's a tough one too, for me. Bluetooth, kind of like WI fi. But something, something's different there for sure. And it's showing up on our tv and where's the remote? Right? Like, I've had to experience my, you know, I've been humbled by my kids so many times trying to just even explain the current that I don't understand. Yeah.
- [23:08]
Sam Parr
Like, I wonder if these, like, analysts who are asking him questions like. Like, do they ever just say, like, yeah, you know what I mean? Like, I don't know.
- [23:18]
Chamath Palihapitiya
There are so many things that boggle my mind about, you know, today's technology. So I'm with you. That, like, this sounds mind boggling, but crazy.
- [23:26]
Sam Parr
But also, but also that someone is audacious enough to keep pushing. Like, keep what? Okay, we did that. What about this? What about this? What about this?
- [23:34]
Chamath Palihapitiya
Right?
- [23:35]
Sam Parr
And to have that open mind, it's. These are engineering feats, but these are also personality feats. Just like when Joey Chestnut ate 70 hot dogs at the Coney island hot dog contest when the previous record was 19. That's what we're dealing with right now. And it's just unfathomable.
- [23:49]
Chamath Palihapitiya
It really is. It truly, truly is. Hey, let's take a quick break. You know that feeling when strategy is done, the brief is written, everyone's aligned, and you realize someone still has to sit down and Actually create all the content that someone is usually you. And it's due tomorrow. Well, the breeze assistant from HubSpot can help. It works right inside HubSpot. You can draft campaign copy, blog posts, emails, all in your brand voice, all using your actual customer data. So you don't create just content, you create content that converts. Check out HubSpot.com, the agentic customer platform for growing businesses.
- [24:21]
Sam Parr
What about Twitter and Xai? Okay, so that's kind of insane to me, the fact that a rocket company owns Twitter.
- [24:30]
Chamath Palihapitiya
Yeah. You know when you invite someone to your party and then they bring that friend. Yeah, that's kind of, kind of the Twitter problem right now.
- [24:40]
Sam Parr
And I think it was sold for $250 billion to SpaceX. Is that right?
- [24:44]
Chamath Palihapitiya
So a lot of my thinking with Claude yesterday for this, and I had Claude build me my own deck about SpaceX. Here's one of the things about Twitter. So Twitter's ad business is 40% the size of old Twitter. So X Advertising is at 1.8 billion now. It's down 100 million from last year. And it's half of what the ad revenue was before he bought it in 2021. Five years ago, he added subscriptions and payments, whatever. So that's now a billion dollars in arrow. So the total, you know, is 2.8 billion. And it was 4.5 when he bought it. So the X stuff has, you know, has, has not quite worked. He did figure out how to spin it. Right? So he figured out, hmm, okay, the X business is not that great. And I can't get the engagement to be as high as, you know, WhatsApp or Instagram or TikTok or any of these other apps. But what it does have is data. And maybe I can use that data to power Grok. And then he tried Grok. Now Grok is falling behind Anthropic and chatgpt. So he said. But, but he. Again, you know, I think that one of the great hallmarks of entrepreneurship is basically failing forward. And so maybe in the same way that X sort of failed forward into like, oh, well, it gave Grok some differentiation. But then Grok hasn't quite kept up with everything else. He used his Groq asset, where he's trying to build a ChatGPT anthropic competitor, even though it's way, way behind. He built the largest data center for training AI Colossus. And he's really good at building the machine that builds the machine. So he's basically the what he's the best at is building factories at this point. And so, you know, Tesla has its own factories and produces, you know, enormous amount of cars faster than anyone else. Designs and builds. He's doing it now with the Terafab, he does it with the rockets, he did it with data centers here. So he built the largest cluster of GPUs, bigger than Google, bigger than Facebook, bigger than anyone. The problem is he doesn't have enough users. So he has this like, you know, he bought a huge mansion and doesn't have any friends to come over to entertain.
- [26:50]
Sam Parr
Well, because what does Twitter have? I think you say 500 million. That's shockingly. 500 million is still. This is amazing. A niche social media network.
- [27:01]
Chamath Palihapitiya
Yeah. And Grok has 100, you know, 100 million users, whereas ChatGPT has a billion, so 10 times smaller. And so he doesn't have the use of it. So what did he do? He just turned into Airbnb. He started renting out Colossus to Anthropic and to Google. And so just in the last, I don't know, two months, they announced two deals that I think are combined worth like $20 billion or more. A billion dollars a month, so 12 billion a year to use his data center, and that's Google. Google themselves was the best at building data centers and they need to rent from Colossus. And then same thing with Anthropic, where Anthropic is paying, you know, over a billion dollars also a month to rent out. Now these are short term agreements. They can cancel with like 90 days notice. So who knows, five years from now, it might just be a temporary stopgap solution. But again, failing forward, like figuring out like, okay, are we fucked? No. What if we did it this way? And then finding a way to survive in advance.
- [27:57]
Sam Parr
Yeah, they basically like, they put this S1 out, I think four or six. I forget when. One or two months ago. And I think it was last week or maybe a Monday. It was almost like a quiet amending of the document that says, hey, Google just signed up to spend a million dollars, a billion dollars a month with us to become a customer. And that, that, that's insane. That's such a huge number, by the way.
- [28:20]
Chamath Palihapitiya
I, I have to think the, the 9D chess move there was that they knew and they staggered the, they sort of staggered the announcement. Maybe it was truly. Oops, forgot to mention this, but I think it would have been smart if they intentionally did that too.
- [28:35]
Sam Parr
Yeah, it was cool.
- [28:36]
Chamath Palihapitiya
Do you want to see any of these slides, by the way? Can I just, can I just run you through these?
- [28:39]
Sam Parr
And you just did you have a sit down with your wife and you're like, okay, so hear me out. And you showed her like every slide.
- [28:47]
Chamath Palihapitiya
No, you're, that's you. I'm doing that with you.
- [28:48]
Sam Parr
Right.
- [28:50]
Chamath Palihapitiya
I told it to explain it to be like I'm Charlie Munger trying to understand the business. And it's like, okay. Charlie Munger would ask like is it in my circle of confidence, how do I lose money here? Show me the incentives. What's the moat? Prices. Price is what you pay, the value is what you get. And so started to basically break it down. Starlink is the part that makes money. Xai is the part that burns it. And the rockets are the railroads in between. You're not buying SpaceX, you're buying three different companies that are stapled together. You have the space launch business, the Internet connectivity business and the AI business. And then here's the high level numbers. So 18 billion in revenue, losing two and a half billion. 6.6 of adjusted EBITDA.
- [29:25]
Sam Parr
I'm going to bring that up in a second.
- [29:26]
Chamath Palihapitiya
Yeah, I think that's whack. They burned 8 billion of cash last year. This is the Starlink business. So it grew from 2 million subscribers to 10 million subscribers. But you can see it is starting to slow down. So that's one cause for concern was that Q1 this year was not high growth and that the average revenue per paying user as they go into more third world use cases of who needs, who needs Internet where they have low connectivity, obviously they can't charge as much. They dominate the rocket business. 85% of all launches, 80% of all mass to orbit. Let's see, everything is dependent on starship, which is not a guarantee. And that's the big question. And then, oh, they also bought Cursor. So they bought cursor for 60 billion or have an option to buy cursor for 60 billion. And cursor I think is at 3 or 4 billion in revenue. And so again trying to play catch up in the AI game by merging Cursor needed to figure out a way to have compute and their own models and a way to survive against codex and cloud code. And so it's this sort of game theory where the bottom players in Survivor will form an alliance in order to flip the game on its head. Basically. Let's see if there's anything else here. Oh, he owns 42% of the company. Do you know this?
- [30:43]
Sam Parr
Wow. No, it's amazing.
- [30:45]
Chamath Palihapitiya
After 20 years and you would think Rockets are like the most capital intensive business that he's had to raise for, for him to still own 42%. Just to put that in perspective, like Aaron Levy from Box, which is like Cloud, you know, a folder in the cloud. I think he owned 4% of box when it went public and he somehow still owns 42% and has 85% of the voting control. Like it's unbelievable. Yeah, I have some other things about his comp package is pretty crazy. We can go there. But anyways, AI says Charlie Munger would put it in the too hard pile. It's a wonderful business at a silly price is the AI Charlie Munger conclusion. And it's a great business. You could admire it from afar. You didn't need to own it was the, was the conclusion that he had.
- [31:26]
Sam Parr
It's just logic doesn't particularly matter. I don't think like, I don't think that you can use like a traditional way of looking at this. An Elon asset is not a normal company. So it's, it's really, it's hard, it's hard to price this. It's. It's almost like this weird thing where it. I always thought it was interesting. Whenever you're like going through an M and a process, someone will say like I'll get, you know, I'll buy this company for 15 times earnings. And what I like to do is change earnings to the word years. So it's like I'm going to give you 15 years of payment up front. And when you look at this, you know, the, the, the present value of a company is the sum of its future cash flows. When you look at this, you're like, it's hard to, I don't even know what it is. Is it a hundred years? Is it hundreds of years? Is it 50? I'm not sure but however the length of it is, at this point it's so big likely that it's like will Elon die or not?
- [32:21]
Chamath Palihapitiya
I think the crazy thing about this and then even when somebody, why would somebody pay 15 years ahead is because you're growing. And so yeah, it's 15 years at the current rate. But looking at the growth that might only be six, might only be four.
- [32:34]
Sam Parr
It might, your growth rate is dependent on like you're making the Elon bet, which is can he figure it? But I'm like, I don't even know if he exists by the time that, like this, like you get the sum of your future cash flows on this one.
- [32:47]
Chamath Palihapitiya
Well, here's what you need to believe. You'd need to believe that the starlink business alone, which is at 11 billion in revenue, is probably going to grow to 30, 40, 50 billion in revenue over the next, let's call it five years. You need to believe that starship works and that they could take, you know, so they can scale both starlink as well as the data center. So you need to believe that starship works. You need to believe that data centers in space are going to be a thing. And with that you'd have to also. I don't think this is as much of a you need to believe as in it's not really a leap of faith. It's more of a realization which is Saudi Arabia made trillions of dollars because they owned the oil. They were the largest and lowest cost producer of oil and energy and the world ran on energy. Well, if you look at the next 20 years, it seems like the world is going to run on compute. Every single business, every single consumer, every single robot, every single car, every single appliance is going to have a compute need. And so then there's a question of who's the Saudi Arabia of compute and what you would be thinking with. If he goes to, if he's the one who could put data centers in space, and data centers in space are going to be giving AI tokens at a maybe whether it's 50% or 200% lower cost than ground based compute for inference, then he's Saudi Arabia in space and he's the only one positioned to do that currently.
- [34:18]
Sam Parr
So they have a line item or a section of the S1 that talks about future business lines. And he actually says that mining asteroids is, and potentially mining Mars and mining the moon for energy. And I, I guess that potentially means some type of oil or something like that. And so they actually have that covered as well.
- [34:43]
Chamath Palihapitiya
Yeah, of course, naturally. Mineral mining.
- [34:47]
Sam Parr
Let me listen to this. So this is actually a super interesting thing. So listen to what the company's mission is. The mission is to make life multi planetary and understand the true nature of the universe and extend the light of consciousness to the stars. And then it goes on to say that they want to create like a species level redundancy so consciousness isn't tied to one planet. And that they don't want humans to have the same fate as dinosaurs. That's what it says at the top. That's the mission of the company. Is that crazy?
- [35:18]
Chamath Palihapitiya
What's the Hampton mission? Let's just put those side by side,
- [35:23]
Sam Parr
dude, like, you know, to connect people but like the, the, the, for 99% of the people, the mission of any business is to take the money in your bank account and to put it into my bank account. Okay? So it's really challenging for me to compare this, to make life multi planetary and make sure that we don't have the same fate as dinosaurs. This isn't fair. So that's kind of incredible.
- [35:51]
Chamath Palihapitiya
Also I've met, I've met a few doctors, surgeons that have like kind of a God complex. And in some ways it's like, look, if that's what it took to get you to become the best, you know, I actually want my, you know, my heart surgeon or my brain surgeon to have a bit of a God complex, a bit of a savior complex. I don't mind that he's got a bit of a God complex, a bit of a savior complex. It's okay. That's what it takes for just to be like, hey, you're already the richest man on Earth. You want to sleep on the factory floor. You want to, you want to go ahead and build these and put it all on the line again, it takes something that is irrational to make man want to do that. And that could be noble. Or you could read into it like it's kind of a bit of a insecurity, personality defect.
- [36:32]
Sam Parr
No, that's not what I'm getting at. I wouldn't say that I'm the huge like Elon fanboy, but I think this mission's awesome. No, I think it's great. I think it's fantastic. I'm not mocking it. I think that it's incredible. I think it's inspiring. I think it makes it easier to inspire your employees. There's the famous story of someone talking to the janitor who worked at NASA in 1968, the year before we went to the moon. And they said, sir, what do you do? Here he goes, I'm helping us get to the moon. Like, I think that's awesome. I think Wall Street Journal had an article on the blue collar workers at SpaceX and how much money that they were going to make on this. And they all seem incredibly inspired. So no, I'm on board. I think it's awesome.
- [37:09]
Chamath Palihapitiya
So look at, I don't know if you saw this, but SpaceX IPO is expected to create over 4,000 new millionaires, including some cafeteria workers whose compensation packages included employee stock options. And then this, me and the SpaceX lunch lady.
- [37:27]
Sam Parr
Dude, that's so crazy. Yeah, I think it's great. The amount of wealth that's going to be created. I actually wonder, I don't know enough about economics but like with all these new rich people being created with anthropic ChatGPT and SpaceX, I wonder what that's going to do just to housing prices. Obviously San Francisco is insane. Have you been seeing anything in San Francisco?
- [37:45]
Chamath Palihapitiya
My sister just sold her house, but it was like pre the IPO chatter and she literally, she didn't put it on the market. She bumped into a real estate agent, was like, I have somebody who's looking. The guy walked in, literally, there's not an exaggeration. He walked in for five minutes without his wife and made an all cash offer on the house at like what they were going to list it at. And that was it, it was done. He literally never came back even and bought the house. I've never seen anything like it.
- [38:14]
Sam Parr
It's just crazy. I wonder what's going to. Obviously the coastal cities are going to like, you know, things are going to change, but I wonder what it means for us to the country. What's this say?
- [38:22]
Chamath Palihapitiya
So pour one out for Sam Bankman Fried. He's on the. There's a lot of winners out of this ipo. He would be one of the losers out of this IPO because he had an investment in SpaceX that would have been worth $15 billion. And his overall portfolio he had Anthropic, which would be worth 80 billion because he was one of the earliest investors in Anthropic. He had Robinhood, which would be about 5 billion. He had Cursor. I think he was literally the first investor, maybe in the first round at least. And that would be a 3 billion plus stake. He's got SpaceX 15 billion, Solana 5 billion and his overall portfolio out of his slush fund that he was inappropriately illegally using customer funds to go Invest. It'd be $114 billion today. He'd be seen as one of the greatest investors of all time.
- [39:08]
Sam Parr
Who gets, owes, who gets the shares.
- [39:12]
Chamath Palihapitiya
So they liquidated all these when they did the bankruptcy. So nobody won. Actually, the people who bought out of the bankruptcy estate, it's kind of like when Tim Draper bought all that bitcoin at a low price from the US Government when they seized the Silk Road bitcoin. It's whoever bought the bankruptcy, the assets out of when they did their liquidation, that's who won.
- [39:34]
Sam Parr
That's insane. One thing that I want to call out, and I don't have a good explanation for this, but they talked about in the S1 about having like, okay, so the way it works is you see this, you see EBITDA, which is earnings before interest, taxes, depreciation, amortization. Then they do this thing called adjusted EBITDA which in my opinion makes no sense. I guess there's a lot of reasons as to why they do it. But the best way that I could explain it is, you know, every month my wife and I, we sit down and we look at our budget and the we, we say how much did we spend last month? Is that in line with what we predicted? Whatever. And so that can help us predict future expenses and let us know that we're keeping to our financial plan. Every once in a while, or rather in the first six months of us doing this we kept saying to ourselves, well we took this vacation. But like that's a one off. It's a one off. We, you know, we took our parents on vacation. It was to celebrate this thing. And then in month six of doing this we're like, you know, we just took this other once in a lifetime vacation. And you know what, I think we just have to like assume that we're gonna have these like one off things. Gifts, vacations, buying a car. So we just got to up the budget and that's what we're going to do. Adjusted EBITDA is just like saying, you know, you had this one time lawsuit or this one time and I think in the case of SpaceX, it's about depreciation which doesn't exactly make sense. They're like we're going to have this one time depreciation. I think that's what it said. Plus earnings before interest and depreciation. I don't understand why you would add that adjust for it doesn't make sense to me. Does that seem weird to you?
- [41:00]
Chamath Palihapitiya
No, I think spot on. I think Buffett and Munger famously hated EBITDA as a thing. I think they just called it bullshit earnings. It's like our earnings are this and then our bullshit earnings are this. And especially in a company that's so capital intensive. I think they had like 20 billion of capex spend in the last 12 months or something like that. Obviously depreciation is very, very real. I think for software companies it could be a little bit different. But this is not a software company. And then the adjustments, you're right, you know, it's like oh, except for, you know, we adjust back in for stock based compensation. It's like, well that's how you pay the people to do the work. So why are you keep why do you keep adding that back in? Is that going away anytime soon? Not really. For example, it might be the go public costs. Sure, that's an adjustment. But you know, the adjustments tend to be far more favorable than that.
- [41:46]
Sam Parr
I think there was a few other funny things. Do you know they, I think they own like $2 billion worth of bitcoin and I think some of the adjustments was that bitcoin price has gone down. Did you see that?
- [41:57]
Chamath Palihapitiya
That's what I need, dude. I need my adjusted net worth. It's just adjusted for my stupid ass investments.
- [42:03]
Sam Parr
Yeah. And then they, another funny thing was they did a project where they paid a vendor in shares and the strike price of the shares was like 420. I think it was like 42.20 or something like that. And then I think that when they did like a 409A valuation for Twitter, it was like I'm screwing up the exact numbers. But I think if it was $42 billion, they made it like $42 billion like 420. And like if you do like a control F420, it's all, it's everywhere. And that's kind of insane.
- [42:35]
Chamath Palihapitiya
It's the most try hard part of Elon. I, I, I despise his 420 obsessions.
- [42:41]
Sam Parr
Is there a hitchhikers? I've never read Hitchhiker's Guide to Galaxy. Is there like a 420? Is this like a. No. A weed 420 reference or is it a 420 thing?
- [42:49]
Chamath Palihapitiya
Yeah, it's a. Does he dump too?
- [42:52]
Sam Parr
Right?
- [42:56]
Chamath Palihapitiya
I think in Hitchhiker's guide it's like 42. That's the number for the universe. But that's not, I think why he's doing 420.
- [43:01]
Sam Parr
Okay. Well, yeah, I wasn't sure, but that's pretty silly. What's this?
- [43:06]
Chamath Palihapitiya
Shout out to the Ontario's Ontario Canada Teachers Pension fund, which in 2019 decided, you know what, we're going to sling an investment into SpaceX. Back before SpaceX was pretty obvious and they're going to make $12 billion this year and in the IPO, which you know, more than funds their pension, it's, you know, $33,000 per teacher that's in the, in the fund for the 300 something thousand teachers that are, that are in the, in the pension fund. So I think that's pretty cool and a great move by the Ontario fund, which is also hilarious because I'm pretty sure they like boycott Elon, but like,
- [43:43]
Sam Parr
whoops, yeah, that's pretty hypocritical did you put a appendix on your slideshow with just funny tweets? Because that would be wonderful.
- [43:50]
Chamath Palihapitiya
Yeah, this was manual because Claude don't have that sense of humor that I have, so I had to do this work myself. Can I tell you a couple other nuggets that I thought were interesting?
- [44:00]
Sam Parr
Yeah.
- [44:01]
Chamath Palihapitiya
Did you see who else is on the cap table?
- [44:03]
Sam Parr
No, not really.
- [44:05]
Chamath Palihapitiya
So I'm always interested with these IPOs. Like who, Joe? I don't know. This episode. This part of the episode is brought to you by Pocket Watchers. I want to know who else is getting rich out of this.
- [44:15]
Sam Parr
Of course.
- [44:15]
Chamath Palihapitiya
And dude, when I was watching the
- [44:17]
Sam Parr
Knicks game the other day, I kept pausing. I'm like, zooming in. I'm like, who's that courtside? Who's that person?
- [44:21]
Chamath Palihapitiya
Dude, I'm begging for this courtside app. I just want somebody to take a picture of the entire courtside seats and tell me who everyone is, what they do, and how they made the money. And I'd like that for every single game.
- [44:29]
Sam Parr
And, like, at least the schleppier the guy, the more I want to know, because I would zoom in. I'm like, yes, guy.
- [44:34]
Chamath Palihapitiya
Shall I move your head? Who is that guy?
- [44:37]
Sam Parr
Yeah, it's like, I get why you're famous. You're hot.
- [44:39]
Chamath Palihapitiya
Who's the guy with the triple chin? That's Courtside and New Balances.
- [44:42]
Sam Parr
Yeah.
- [44:43]
Chamath Palihapitiya
How much waste management does he do?
- [44:45]
Sam Parr
Yeah, that's what I. That's all I want to know is who's the schleppiest looking.
- [44:49]
Chamath Palihapitiya
Not even the New York ones. When they're playing in San Antonio or Oklahoma City. I'm just like, oh, what is that? Oh, he, you know, he collects all the used chicken wing bones from restaurants all around the country and turns it into bone broth. Like, ah, that's what this guy does.
- [45:05]
Sam Parr
There's a funny video of this, like, guy who looks exactly like you're describing. I think I forget exactly where it was. Maybe Canada. But Drake's sitting at the game, and this guy and Drake are sitting next to each other. He looks like he's six years old. He's got a beer belly, and he's just sitting there. He looks like he's, like, laughing hilariously. And they put the camera on Drake and everyone's cheering, and the guy looks over at the Drake and he goes, are you famous or something? And Drake was like, yeah, I'm kind of famous. And then, like, the. The. The. The meme actually found that guy's identity. And he's significantly wealthier than Drake. And he's like this big shot who no one knows and he owns some type of like, boring business. And it was pretty funny,
- [45:43]
Chamath Palihapitiya
by the way. That's one of the only cool things you can say to a celebrity. Like, I've actually played the scenario out in my mind many times of like, how do you. If you see, if you actually see someone really famous, like, if you avoid it, Lame. No story. You go up to him, you ask for a picture. No way. Just, you know, you walk, you walk away with a picture and no dignity. You annoyed them. Like, what do you go tell them you're a big fan? What do you actually do? I think you know, what you just said, which is like, are you famous or something is great. Because then they have to be like, yeah, I'm Drake, I'm. Then they just have a blank face like, I'm a rapper. They're like, okay. And they're like. And you have to start justifying yourself. Like, that would be great. I want to do that to Drake, dude.
- [46:24]
Sam Parr
Six months ago, I saw this guy in the street and he was a cool looking dude. He was young, he looked around my age and he had this beautiful dog with him. And I was out to eat, like on the street. Like we were at a sidewalk table and he was, was just standing there. It looked like he was waiting for his wife or something. And I walk over, I'm like, man, that's a beautiful dog. I had a dog that looked just like that. And I showed him photos of my dog. I showed him my tattoo and I just learned. I hung out for 20 minutes. He's like, yeah, I just moved here. I'm still liking New York City, this and that. And I was like, cool. And these people were like staring at him. And I'm like, are you famous? What are you doing? He goes, yeah, I just, I play for the Knicks. My name's Landry. And he told me his last name. What's his last name? Is it Sam? What is it?
- [47:03]
Chamath Palihapitiya
Shame it, dude.
- [47:04]
Sam Parr
I totally had the opening. Like, his wife came over. My wife was talking to his wife. We totally had the opening where I could have like exchanged like notice.
- [47:11]
Chamath Palihapitiya
He's 6 5.
- [47:14]
Sam Parr
I know, I didn't. Everyone in New York is like, good looking like, and striking, like, and I just thought he was a dude.
- [47:19]
Chamath Palihapitiya
And you didn't notice he looks like the original Jesus. Like, does he look like Jesus?
- [47:25]
Sam Parr
I don't know, man.
- [47:26]
Chamath Palihapitiya
He didn't like, oh, it's Jesus. That's Why everyone's staring.
- [47:29]
Sam Parr
He didn't look like that. No, in real life.
- [47:32]
Chamath Palihapitiya
Surprised you didn't tell him, like, sorry, everyone's staring. I have a podcast.
- [47:37]
Sam Parr
Sorry, have you. Do you use Twitter?
- [47:38]
Chamath Palihapitiya
I think it's because I'm on the mix.
- [47:41]
Sam Parr
No, we. I literally sat with him for 20 minutes talking about his dog. And like there was totally, by the way, some chemistry going on where we could have like, you just moved here, I just moved here. You know, we should do what it
- [47:51]
Chamath Palihapitiya
is intertwined and you left it that
- [47:53]
Sam Parr
way for a minute and, and I, I thought he was like a walk on. I thought he was just like a, you know, like the lucky guy. And then I see him last night and I'm like, landry, what's good, dog? I had that.
- [48:07]
Chamath Palihapitiya
My brother in law has a great move. He pulls with famous people where if he sees them, he just like he saw Mike Tyson once and we were walking and he just goes up to him and he's, Mike, what's up man? Good to see you. And he just daps him up and he just says, good to see you. Like as if he's seen them before. And then they're like, who's this guy? Seems like he knows me, I must know him. So they just treat them really well and they just dap it up and they move on with their day. And I've seen them do this now four or five times and I, I have to say this currently like the best move that I've seen anyone do with these people.
- [48:39]
Sam Parr
I use my kids now. I saw Tom Hanks recently at a pizza place and it was just me, my daughter and him at this pizza place. And I was like, I don't really want to like approach him, but like, it's kind of the greatest guy ever. So I let my daughter walk. I saw which way he was walking and I was like, naomi, walk that way. And she walked and intercepted it. And intercepted. And he was like, oh, hey, little girl, how are you? And he started talking to her and I was like, yeah, got it. And so I heard his voice and it was awesome. So I do that now.
- [49:06]
Chamath Palihapitiya
Yeah. Use your child as bait. Naturally, the thing to do. Back to who's famous on this list. I'm going to read you a name. I want you to tell me if you even know who this person is. Antonio. Gracias.
- [49:25]
Sam Parr
He's like his buddy who started a hedge fund.
- [49:28]
Chamath Palihapitiya
Yeah. So the second biggest shareholder of SpaceX is Antonio, who owns about 7% of the company. He's the only one over the 5% threshold as an individual, I think. And it's through, you know, he has this thing called valor. And basically Antonio, he's in Elon's biography a bunch, which is he had been like, I think post business school, they started, like, buying, like, businesses that did manufacturing but weren't being run well and like a meatpacking business or stuff like that. And so he just got really good at, like, running and operating businesses that had manufacturing or production facilities. And so when Elon needed help with, like, early days of Tesla or early days of Space X, he would just bring Antonio in to like, you know, can you help me figure out the bottlenecks in the production line and the factory and, like, how we should be doing things differently? And they kind of both, like, he became his study buddy for ramping up production and Antonio was always there to help. There's a story about how when Tesla was like on the brink, he loaned Elon like, I don't know, a million dollars or something like that personally, not for any equity, just like, you need it. Here you go. And so he's going to make like $90 billion in this. Oh, my God. Which is incredible.
- [50:40]
Sam Parr
There's also a guy. One time when I hosted a hustlecon dinner at your office, there was this guy named Steve who came.
- [50:49]
Chamath Palihapitiya
Today's podcast is brought to you by my friends at Mercury. They make the world's best banking product. I think you know this already. I use Mercury for all my businesses. I think I have like maybe seven or eight businesses. We use Mercury as our business, banking across all of them. And now they actually just launched a personal banking account. So I have my personal account there. I moved off of Wells Fargo and Chase. I'm just all in on Mercury. Why? I like products that are easy to use. I like products that get me and the problems that I have. So, like, very easy to make a joint account with my wife. Very easy to spin up virtual cards. One click and I get savings yield. It just has all the stuff that I need in one place. So if you're looking for the best banking product on the market, it's definitely Mercury. I will fist fight anybody who disagrees with me on that. Go to mercury.compersonal and learn more. Mercury is a FinTech, not an FDIC insured bank. Banking services are provided through Choice Financial Group and Column N A members fdic.
- [51:39]
Sam Parr
And back then I knew Steve via my friend Neville. He owns this thing called, or helped start this thing called Gigafund. Have you heard of Gigafunt?
- [51:48]
Chamath Palihapitiya
Mm.
- [51:49]
Sam Parr
It's a. It's a fun but started by two guys. Steve, who is the. I'm acquaintance, Luke is the other guy. So Luke is the. One of the PayPal founders, I believe, or founding team members. And Steve and Luke got this thing going and at the time, I don't know if they described it this, as this, but it was pretty much. It was called the gigafon and it was just Fund Elon. And this is me talking, not them, but they would say like, we're just going to raise money and invest in Elon. And I believe they are one of the big shots as well. But Steve was actually at your office. I don't know if you knew that.
- [52:24]
Chamath Palihapitiya
I did not know that because even though you hosted events in my office, I didn't really get the invite all the time to go attend them.
- [52:31]
Sam Parr
That's not true.
- [52:32]
Chamath Palihapitiya
I was working. I was working. I want to read you an email I have open right now, a email from somebody who used to be at Founders Fund and gigafund spun out of Founders Fund. Luke was at Founders Fund and then he left to start gigafund. So the email basically says, you know, one of the smartest and bravest things I ever saw someone do was when Luke was at Founders Fund, he just kind of like sat back and realized that the optimal way for him to invest was simply to just back every Elon company and that's it, take all the money and put it into the Elon companies. And at the time, that seemed like, you know, kind of crazy because Elon was doing pretty crazy companies. And in addition, it also seemed not sophisticated, which I think is the underrated part of this. And actually the part that's more interesting to me, like, if you. If you look back like the last 15 years, all you had to do was buy like Google and Facebook and Amazon and just sit on your hands. You didn't need to do anything. You know, Bitcoin and chill. You didn't need to do anything. We all want to do advanced, complicated, smart, sophisticated sounding things, but in reality, if you just pick the right, you know, pick the right horse. And in some cases, like what I'm talking about with Google and Facebook and Amazon, these were obvious horses. These are not. Like, it was not a surprise to anyone in 2010 that those were going to be important companies over the next 15 years and you just had to not do other shit. Famously, Bill Gates selling his Microsoft stock. Bill Gates would be the wealthiest man in the world had he just not sold his Microsoft stock. Chamath after Facebook, started his own fund and then started doing SPACs and bought the Warriors. And he's done this and that and this and that and this and that. All he had to do was just hold his Facebook stock from it. He was an employee. He would have done better than everything he's done since then. So we, we seek out sophistication, we seek out activity. But, but simplicity is actually, you know, a more powerful thing if you, if you get it right. And so he was. This email basically says like I remember when he said that, I remember what everybody was thinking.
- [54:41]
Sam Parr
And was it like a chain email? Like, like he announced that he was leaving and he sent it to like his buddies?
- [54:47]
Chamath Palihapitiya
No, no, this is somebody who was at Founders Fund just emailing me, telling me about this and, and so, and I've, I've. It always kind of stuck with me. And now when I'm looking at this filing and you see Gigafund and Luke
- [54:59]
Sam Parr
Nosek, oh, they're listed. So they have a huge stake.
- [55:02]
Chamath Palihapitiya
They have a huge stake.
- [55:03]
Sam Parr
Got it. I was never sure how big it actually got, but I remember Steve through a friend of a friend. Someone was telling me Steve's story and he was like, he had this company that was doing really well but he kind of quit it to just do this. And I'm like, that's it. That's all he does. And I remember I had the same emotion. I'm like, but why would he. There's gotta be more to it. And yes, you can do that, but
- [55:24]
Chamath Palihapitiya
you should also do xyz. It's like no, actually you should not do xyz. In addition, you should just do the one thing. So I thought that was pretty funny. Steve Jervison is who. I thought you were going to say, do you know Steve Jervison?
- [55:34]
Sam Parr
Yeah, I do.
- [55:35]
Chamath Palihapitiya
He started dfj like a fun. Now he's got his own fun future ventures. I've met him once. Really surpri like just a not really nice guy.
- [55:42]
Sam Parr
He's like a wacky, like silly wacky future.
- [55:46]
Chamath Palihapitiya
A true futurist. And if you go. I think a fun interesting read is go Google. If you're a true business nerd, go Google Steve Jervison and go look at his Flickr. That's right, Flickr, like the old photo sharing website. For some reason he's like an amateur photographer. He loves to like he would go and take pictures of the early rocket launches at SpaceX and shit like that. And like you know, the first bitcoin mining rig he'll go take a picture. And he's talking about bitcoin back in 2012, and he's excited about Bitcoin and he would basically take a photo post on Flickr and write like a mini a caption that was essentially a blog post about why he's really excited about a certain technology. I've actually learned a lot just by going and reading Steve's Flickr. I think there's very few true futurists in the world, and he's one of them. And he was one of the earliest investors at Tesla, earliest investors at SpaceX never sold a single share, which is the other remarkable thing is to hold through all the ups.
- [56:42]
Sam Parr
His wife Genevieve was my boss at my first job ever. And so I knew Genevieve very well.
- [56:49]
Chamath Palihapitiya
She's cool.
- [56:50]
Sam Parr
Yeah, yeah. And I'm friends with her on Facebook. And so, like, I've seen like this whole thing and like I, you know, I see all these like cool photos of what they're doing and it's like going to rocket launches this and that. And it's been really cool to like see behind the scenes a little bit of that. And so that's been kind of funny as well.
- [57:07]
Chamath Palihapitiya
Yeah. And you know, I think there one of the reasons on this podcast I try to be more optimistic and benefit of the dowdy with, I don't know, technology and future. Like, yeah, a lot of people get things wrong. Yeah, a lot of people build dumb stuff. Yeah, a lot of stuff doesn't work. That's pretty obvious. And I do that for two reasons. One is I have this phrase which is like, pessimists get to be right and optimists get to be rich. If you hang out in Silicon Valley long enough, you realize that pessimism is a losing strategy. When you're around innovation and technology. It pays to be an optimist. That's the first thing. The second thing is I had a friend recently who had a family member who was dealing with health issues and had had that health issues for decades. And this kind of was resolved. I have to live with this. And then on our podcast we've talked about that guy from GitLab who is curing his own cancer using AI. And that sounds like futuristic, but he actually did it. It's not like a theoretical thing. At least one person did it. And so he went back home recently on the east coast and was like, hey, I've been talking to Claude and I got some ideas. We could try this. And if I get this data, I can feed it to here and I could do this. And what I told them, I was like, you know, it's not that, oh, there are different types of people, they resist it and we don't. It's, we are in the bubble where you hear about people doing these remarkable things. It becomes normalized, it feels possible. It's like the Roger Bannister four minute mile type of thing. Like once you hear that somebody cured their own cancer with AI, guess what? You're going to approach a loved one with cancer very differently than you would have if you had just not heard that that was possible. And one of the great things about hopefully listening to this podcast, but also just generally being around ambitious, interesting, innovative people, is that you get that normalization of what's not normal. You get to hear, you get, you, you get your frame broken enough where you will, in your own situations of life approach it slightly differently. And you know, because I think part of this is like, you know, it's just Elon glazing and it's SpaceX glazing, but like another part of it is like, damn, this dude literally called his shot 20 years ago learn, you know, self taught, learned how to build rockets and recruit this team and did what was pretty much impossible. And then today is the biggest tech IPO in history. You have to respect that and also like forget about how good it is for them, but like, let it break your frame a little bit so that in your life when opportunities strike or an idea comes, you don't count yourself out. You don't, you don't miss that opportunity, you don't, you don't ignore what's in front of you and you actually take action.
- [59:40]
Sam Parr
One of my biggest takeaways of living in Silicon Valley for 10 years was to use the word mostly and almost more often than not. And what I mean by that is I used to say things like that will never happen or that cannot happen or that's impossible. And then I, then I started changing this to where I see something I think is unlikely. And I, I almost always try to say it almost never works, but sometimes it does or like, you know, it mostly ends this way instead of saying that will fail and it will end this way. I've seen this so many times where I think in my head like two black and white of like if A, then B, if someone has this idea, it cannot work or this cannot happen. And you have to train yourself to always think in like not absolutes, but like the odds are this, but those are still like odds that like if enough people try, it could Work.
- [60:34]
Chamath Palihapitiya
Well, speaking of the impossible, one thing I wanted to bring up was the, his pay package. I didn't know this until I was digging in, so I thought this is kind of new learning. So do you remember at Tesla when he had that like crazy. Elon had that crazy pay package idea and he was like, yeah, like if we, if we become, you know, the world's most valuable car company by far, if we get to like you know, 500 billion in value and we're delivering this many cars and we do this, this and we do this, then I get this like huge pay package. And if I don't, I get nothing. I've worked like laughable.
- [61:06]
Sam Parr
When they sign it, they're like, yeah dude, whatever. You do that, it happens and people freak out over it.
- [61:12]
Chamath Palihapitiya
Exactly. There's a compilation of people of mocking it, laughing, being like, this is ridiculous, never going to happen, blah, blah, blah. So ludicrous. But you know, whatever. And then it happens and he gets the money and then a dude with 8 shares sues him in Delaware.
- [61:27]
Sam Parr
Yeah.
- [61:28]
Chamath Palihapitiya
And says no, you know, that wasn't, that wasn't, he shouldn't, that shouldn't have been approved. That's too generous. And it's like, dude, it was seen as impossible before and he got stripped of the pay package and then blah, blah, blah, you know, he got, ended up getting revoted in, reinstated.
- [61:41]
Sam Parr
But the plaintiff was like nuh, that, that was basically the argument.
- [61:47]
Chamath Palihapitiya
Yeah, it's insane. Have you seen what his pay package is here? And he has like the same one. Okay, so let me just read this to you. So the very first one is called the Mars Award. So Elon gets 1 billion shares in SpaceX.
- [62:04]
Sam Parr
How many points is that?
- [62:06]
Chamath Palihapitiya
So it's going public at $135. So that'd be 135 billion at today's value. But obviously if he did all this stuff, it would be worth a lot more than today's value. It would be. The total grants are like $750 billion. That's his like hypothetical comp. If he hit, if he hits all these things. But now listen to what he's going to hit. Two things are required. One, the market cap has to grow to seven and a half trillion, which would be the most valuable company ever. And two, a permanent self sustaining colony on Mars of at least 1 million people. Both have to happen for him to get paid. That's the Mars Award.
- [62:42]
Sam Parr
That's crazy.
- [62:43]
Chamath Palihapitiya
A million people living on Mars. The other One is the AI CEO award. So this is 300 million shares. So a third of that. This is kind of like the consolation prize, you know what I mean? This is a little ice cream he gets as a treat, which is the company goes to 6.5 trillion in value and he's delivering 100 terawatts of compute per year from non earth data centers. So he does the space data center thing and delivers 100 terawatts of compute per year. Now you might be wondering. 100 terawatts. I don't really know how to put that in perspective. Guess how much. So he's trying to. He gets it. If he does 100, guess how much the total kind of current US terawatt production is.
- [63:29]
Sam Parr
I don't even know what a terawatt is. So, so we're talking like a unit. You said 750. Is that what you said he wants?
- [63:35]
Chamath Palihapitiya
If he does 100, he gets the award.
- [63:37]
Sam Parr
100.
- [63:38]
Chamath Palihapitiya
What is that relative to all of
- [63:40]
Sam Parr
the U.S. so he gets money at 100. What's the current us? I don't know.
- [63:43]
Chamath Palihapitiya
Take a guess.
- [63:45]
Sam Parr
50.
- [63:46]
Chamath Palihapitiya
So that would be like if he doubled the U.S. total electric grid, that'd be pretty crazy, right? It's currently 1 TJ. So we'd have to 100x the entire US grid just to get this award in space from space data centers. Yes. From something that doesn't even exist and people don't even believe is possible. So yeah, goals. Yeah. Set big goals.
- [64:10]
Sam Parr
I guess it's, it's hard.
- [64:14]
Chamath Palihapitiya
By the way, his base salary on. On the way is zero. I mean, he owns obviously a huge percentage of the company anyways. But like, this is the additional grant he gets for continuing to work in the company.
- [64:22]
Sam Parr
This is crazy, man. You, I'm, I. It goes back to the factor. Like the biggest risk is that he dies.
- [64:29]
Chamath Palihapitiya
That's the, the biggest risk is that he dies.
- [64:31]
Sam Parr
The biggest risk is that he dies. Like, the biggest risk is that he doesn't. Like, if I'm a shareholder, I'm like, you must have a dietitian. You must have a sleep coach. That's what we're talking here.
- [64:44]
Chamath Palihapitiya
Or is it like a Jon Jones situation where like the more coke you do, that creates the fighter, you know what I mean? And if you put him on that sleep at 8pm schedule, he's not Jon Jones anymore, dude.
- [64:55]
Sam Parr
I talked to a person who trains professional athletes and he was like, it's so funny. I used to train these baseball players and the ones that were the most eager and did exactly what I said and came to me all the time and said, give me more, I want more to do this. They almost always were never as good as the guys who were like eating M&M's or doing SK. Like eating SK, eating poorly and like going to bed at late cuz they played video games at night and they just show up and like he was like one guy made like a game winning shot. And afterwards I was like so excited I ran up and high five him. He's like, what are you doing, man? He's like, you did the shot. He's like, oh, whatever dude, who cares? And he like kept walking. He's like, the guys who cared, you know, Treat them mean, keep them keen. The guys who cared the least amount and like tried. Not exactly tried, but like put brain space on like the effort or the best and that maybe that's what's happening here, you know, the, the, the weirder that things are, the better that he's going to perform. Yeah.
- [65:48]
Chamath Palihapitiya
Which is, which is, but I mean, how crazy is it that when we hear this stuff it's like, oh, like can he make starship work? Can you make an orbit orbital data center work? It's like we think the higher risk is just that he dies. It's like in the probabilities game we're like, I don't know, the bigger risk seems like that, that it just, it's,
- [66:05]
Sam Parr
you've learned so many times in a row that it's, it's not wise to bet against. So I, I don't think that like I'm a dumb idiot. And we should preface this before this episode. Don't listen to anything. But the one thing that is true is that he's a challenging person to bet against. And so all these science fictiony things, I, I, I, I think that he's bad at timelines, but I think he's good at doing it eventually.
- [66:31]
Chamath Palihapitiya
Okay, well, the glaze fest is over, so. She hated Elon. We're sorry. Yeah, this wasn't the episode for you. If you hate Elon, hate to break it to you, maybe the thumbnail should have given that away. But if you made it all the way here and you hate watched this whole thing. I'm sorry, it's like, you know, you know, the, that percentage of the population that they taste, what is it? Like the thing. Cilantro.
- [66:54]
Sam Parr
Cilantro.
- [66:55]
Chamath Palihapitiya
It tastes like bleach to them. Like genetically. This might have been the cilantro for some people. And I'm sorry if it was.
- [67:01]
Sam Parr
All right, that's it, that's the pod.
- [67:04]
Chamath Palihapitiya
I feel like I can rule the world. I know I could be what I want to.
- [67:09]
Sam Parr
I put my all in it like
- [67:10]
Chamath Palihapitiya
no days off on a road let's travel never looking back. All right, let's take a quick break to talk about a podcast. Because if you're listening to this, you like podcasts. And what's better than one podcast? Another podcast. And let me tell you another podcast you should check out. It's called Success Story. If you like hearing about different success stories and hearing Q and A sessions with successful business leaders, or hearing keynote presentations, or just checking out conversations about sales and business and marketing tactics, this is a great podcast for you. So check it out wherever you get your podcasts.