Inside the SpaceX IPO Filing & the Billionaire Space Race 5/21/26

Summary

Squawk Pod: "Inside the SpaceX IPO Filing & the Billionaire Space Race"

Date: May 21, 2026
Hosts: Joe Kernen, Becky Quick, Andrew Ross Sorkin
Special Guests: Leslie Picker, Jay Clayton, Walter Isaacson

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Episode Overview

This episode dives deep into three central topics:

• The newly public SpaceX IPO filing and the business vision for "the biggest IPO ever"
• The ongoing billionaire space race between Elon Musk (SpaceX) and Jeff Bezos (Blue Origin)
• Wealth, taxes, and government spending in the U.S., focusing on high-level debates triggered by Jeff Bezos’ viral CNBC interview

Alongside breaking IPO news, the team gets expert perspectives from Leslie Picker on the SpaceX S-1, Jay Clayton on tax/fraud issues, and biographer Walter Isaacson on Musk's ambitions, highlighting how space commercialization intertwines with economic and political debates on Earth.

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Key Discussion Points & Insights

1. SpaceX IPO: Filing Details, Valuation, and Governance

[05:07] - [10:54]

• Leslie Picker breaks down the SpaceX S-1 filing:
  • 2025 revenue: $18.7 billion, up 33% year over year
  • Q1 2026: Revenue hit $4.7 billion; net loss also $4.3 billion
  • Long-term debt: $29 billion
  • Seeking valuation: $1.5 trillion (80x last year's revenue), potentially “the biggest IPO ever”
  • Growth drivers: Huge compute deal with Anthropic ($1.25 billion/month through 2029)
  • Starlink: Main revenue stream, claimed as part of $28.5 trillion Total Addressable Market (TAM)—with $26 trillion attributed to AI infrastructure and services

“Most of SpaceX's revenue currently comes from Starlink satellite business. It says in the prospectus that it has the largest actionable total addressable market, or TAM, in human history, which it quantifies at $28.5 trillion.” – Leslie Picker [06:00]

Retail allocation & volatility:

• Up to 30% of shares could go to retail investors globally—unusually high for such a large IPO
• Governance: Musk retains ~85% control; company structure minimizes need for independent directors
• Concern: “The risk of [retail investors] flipping is real, with potential volatility and a very small float.” – Leslie Picker [09:44]

2. Wealth, Taxes, and Government Spending: Bezos’ Viral Interview

[11:28] - [16:49]

• Flashpoint: Jeff Bezos questions efficacy of raising taxes on billionaires to help working class New Yorkers; NYC Mayor Zoran Mamdani fires back on social media.
• Bezos' main point: Doubling taxes on the ultra-wealthy “is not going to help that teacher in Queens, I promise you.” [11:48]
• He advocated eliminating federal income tax for the bottom half of Americans, noting this group only brings in 3% of federal income tax revenue.
• Panel debates “minimum wage,” stake in the system, and sanctity of work (earned income tax credit).
• Recurring theme: Deep skepticism about government efficiency and spending.
• Multiple panelists (and Jay Clayton later) highlight “waste” at scale in NY programs and public schools:

“If Amazon was run like New York City schools... when you finally got the package, the wrong thing would be in it.” – (quoting Bezos) [15:51]

3. Fraud, Waste, and the Role of AI in Government

[21:12] - [25:39]

• Jay Clayton (US Attorney, fmr. SEC Chair):
  • Endorses Bezos’ focus on government waste: “...in a couple of years you'll have less revenue [if you raise taxes further] because flight and all those things.”
  • Specific waste cites: NYCHA spending $12B/year on 500,000 public housing residents without commensurate value; NYC public schools spend $42-44K per pupil/year with subpar outcomes.
• AI’s impact:

“AI is going to affect business... a profound effect is coming in the public sector… you can use the new tools and find [Medicare/Medicaid] fraud in days what used to take months.” – Jay Clayton [24:26]

• Observes difference between incompetence and fraud—good data is crucial for separating these.
• Addresses challenges: “It's difficult to tell the difference between incompetence and fraud. The way to do it is to have good data.” [25:30]

4. Public Sector Fraud and Settlement Debates: The IRS & President Trump

[33:44] - [40:31]

• Discussion on government settlements in context of President Trump’s IRS case and $1.8B victim fund for “weaponization.”
• Clayton: “Anybody whose tax returns have been intentionally leaked should have recourse against the government.” [37:02]
• Hosts debate whether a president should be able to “settle” with his own administration—concerns about fairness and public perception.
• Contextualizes lawfare with historical examples (Spitzer), warning of financial devastation through prosecution.

5. The Billionaire Space Race: Musk vs. Bezos

[43:17] - [51:53]

• Andrew Ross Sorkin’s first-hand report from Blue Origin in Florida:

  • Bezos pushing for a Moon landing by end of 2026
  • "Race for the high ground": National security imperatives and strategic advantage in staking out lunar territory before China.
  • "Lunar permanence" pitched as a stepping stone to Mars

• Walter Isaacson (Musk’s biographer):

  • Upcoming “permanent base on the Moon” central to Musk's vision; shift from exclusive Mars focus to Moon-first approach.
  • Emphasizes public-private partnership: Space as the new AI; 2027 milestone for U.S. lunar base, with China aiming for 2029-2030 [45:24–46:47].
  • IPO’s claimed “$28.5 trillion TAM”: “Sounds pretty insane... But this is bigger than the US. This is, you know, the solar system.” [47:29]
  • Musk’s approach: Treats fortunes “like a video game,” not for yachts but for scoring “trillionaire” status.

“He has pivoted some in the past year or two to say, all right, let's build a base on the moon first... It’s almost like he's playing a video game... he just wants to hit a trillion as if he's playing Elden Ring or Polytopia.” – Walter Isaacson [48:09/48:57]

6. Can SpaceX Make the Math Work? Growth, Losses, and Vision

[51:01] - [54:31]

• Tension between SpaceX’s visionary addressable market and practical questions about revenue growth, losses, and path to profitability
• Immediate revenue upside: $1.25B/mo from Anthropic; Starlink consumer/enterprise growth
• Starlink’s direct-to-phone service holds big promise, especially outside urban areas
• Dangers of volatility with a retail-heavy float in IPO

7. Combining Musk’s Empires: SpaceX x Tesla?

[54:31] - [55:46]

• Speculation: Will Musk eventually merge SpaceX and Tesla?
  Isaacson: "Yes, 2027... it's already almost happening... he kind of melds his two companies and I think it makes absolute sense."
• Musk wants strong control—“but if I go nuts, it’s fine if shareholders oust me”—contrasting with Zuckerberg’s tight grip

8. The Human Element at SpaceX

[56:17] - [57:40]

• IPO filings list Musk as existential “key man” risk—but Isaacson credits deeply talented (if less public) SpaceX managers:
  • Gwynne Shotwell (COO, “great manager”)
  • Bill Riley, Mark Giancosa (propulsion, rockets, Starlink tech)

“If you look at SpaceX quietly behind the scenes, Gwynne Shotwell, she's truly a great manager. You have Bill Riley and Mark Giancosa who are great at propulsion and rockets and figuring out Starlink.” – Walter Isaacson [56:56]

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Notable Quotes & Memorable Moments

| Timestamp | Quote & Attribution | |------------|---------------------| | 06:00 | "Most of SpaceX’s revenue currently comes from Starlink satellite business. It says in the prospectus that it has the largest actionable total addressable market, or TAM, in human history..." – Leslie Picker | | 11:48 | "You could double the taxes I pay and it’s not going to help that teacher in Queens, I promise you." – Jeff Bezos (quoted) | | 24:26 | “AI is going to affect business... a profound effect is coming in the public sector… you can use new tools and find [Medicare/Medicaid] fraud in days what used to take months.” – Jay Clayton | | 37:02 | “Anybody whose tax returns have been intentionally leaked should have recourse against the government.” – Jay Clayton | | 45:24 | “What we're going to do now... is put a base on the moon, a permanent base on the moon.” – Walter Isaacson | | 48:57 | “He just wants to hit a trillion as if he's playing Elden Ring or Polytopia.” – Walter Isaacson (on Musk’s motivation) | | 56:56 | “If you look at SpaceX quietly behind the scenes, Gwynne Shotwell, she's truly a great manager... Bill Riley and Mark Giancosa are great at propulsion and rockets and figuring out Starlink.” – Walter Isaacson |

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Segment Timestamps

• SpaceX IPO Filing & Analysis: [05:07]–[10:54]
• Bezos Interview Recap & Tax Debate: [11:28]–[16:49]
• Jay Clayton: Waste, Fraud, and AI in Government: [21:12]–[27:16]
• IRS, Lawfare, and Presidential Tax Settlements: [33:44]–[40:31]
• Space Race: Musk, Bezos & Lunar Strategy: [43:17]–[46:47]
• Walter Isaacson on SpaceX, Valuation & Vision: [47:26]–[56:56]
• Key Management at SpaceX: [56:56]–[57:40]

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Summary Takeaways

The episode offers a comprehensive, candid look at the intersection of technological ambition, financial innovation, and political debate at the dawn of the new space era.

• SpaceX is poised for a historic IPO—high risk, high reward, and high volatility—pushing retail access and betting on world-changing TAM.
• The space race is heating up: U.S. vs. China, Musk vs. Bezos, with the Moon as “high ground.”
• Debates about billionaire wealth, government spending, and efficiency intensify alongside rapid advancements in public and private sectors, with AI poised to be a game-changer.
• The key man risk is real—whether it’s Musk, Bezos, or government leaders—though success depends on deep, capable teams behind every “visionary.”

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Transcript

[Jay Clayton]

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[Joe Kernen]

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[Walter Isaacson]

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[Jay Clayton]

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[Joe Kernen]

Bring in show music, please.

[Katie Kramer]

Hi, I'm CNBC producer Katie Kramer. Today on Squawk Podcast, we're still talking about Jeff Bezos. Oh, from tthe interview with the Amazon and Blue Origin founder that made news everywhere.

[Becky Quick]

Billionaires, capitalism, taxes, and Trump. There's something for every single person.

[Katie Kramer]

And the other space company, we can't stop talking about SpaceX. Elon Musk biographer Walter Isaacson says ahead of the IPO, there's more to that company than its key billionaire.

[Walter Isaacson]

If you look at SpaceX quietly behind the scenes, Gwynne Shotwell, she's truly a great manager. You have Bill Reilly and Mark Ginkosa who are great at propulsion and rockets and figuring out starlink.

[Katie Kramer]

Plus President Trump's deal with the IRS and cracking down on fraud and waste in the government. With U.S. attorney for the Southern District of New York, Jay Clayton joins us.

[Jay Clayton]

AI is going to affect business like you talk about on this show all the time. The place where it's going to have a profound effect is in the public sector. What it used to take for us to uncover Medicaid fraud and Medicare fraud. Teams of people going through paper and the like. As long as it's digitized, you can use the new tools and find in days what used to take months.

[Katie Kramer]

It's Thursday, May 21st. Squawk pod begins right now.

[Joe Kernen]

Stand Becky by in three, two, one. Cue it, please.

[Andrew Ross Sorkin]

Good morning, everybody. Welcome to Squawk Box right here on cnbc. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin.

[Joe Kernen]

Hold on.

[Becky Quick]

Oh, hold on. To not talk about this right off the top.

[Joe Kernen]

We're going to talk about it. We've got it all.

[Becky Quick]

We have to. We have to. We have to. We have to now. We have because. We have to now because it was so amazing. For some reason you have a. Well, number one, I have a crick in my neck because I Was a bobblehead like that with what he was saying. Andrew, you. I'm trying to think billionaires, capitalism, taxes and Trump and there's something for every single person, every side of the aisle, every single thing that could have been. I was thinking well we're going to hear a lot about you know, the moon or something but this is an interview for the moment that we saw it was number one trend on Twitter all day. You saw that, right? Sorkin?

[Joe Kernen]

I saw it. It was everywhere. And then I saw that New York Post cover this morning.

[Becky Quick]

Classic.

[Joe Kernen]

Yeah, he was, you know what?

[Becky Quick]

He was ready but you're ready to talk. He was ready to talk and get off his chest and you know what a million employees. I look at him and I have such a. I don't want to be a fanboy but such a fanboy for. For what he's done. He's 62 years old which I think is like a baby. And it just, it was just. He really was forthcoming and I mean I was, I got teary eyed a couple of times because you know, I have trouble expressing myself many times and so many things that. So many things Andrew that he said just resonated so much. He only said about two things.

[Joe Kernen]

I knew, I knew it would.

[Becky Quick]

He did. Okay, well I. Kudos.

[Joe Kernen]

I knew there was.

[Becky Quick]

I would've loved the show but he

[Joe Kernen]

had it for everybody. Cuz that was the thing I heard from so many people who picked. There were certain things I knew that you would like that he would say there were people on other sides of the political aisle that would like it was just across the board he was, you know and that's one of the things I think makes him such an interesting guy. Beyond his remarkable success and all the amazing things that he's done as a business person but as he thinks about the policies and everything else for the country, so is he. And then to see all the react next week. Yesterday was also.

[Becky Quick]

Do you ask him for next week or. He's. I guess he's probably not.

[Joe Kernen]

Meantime, the big story of our morning. SpaceX taking a very big step towards what's almost certain to be the biggest IPO ever. And want to get straight over to Leslie Picker. She's got the perspective, she's been going through all of it. What do you see as the biggest highlights? Leslie.

[Leslie Picker]

Hey Andrew, Good morning. Yeah. After being filed confidentially, Space x flipped its S1 public yesterday giving a long awaited peek into the 24 year old company's financials. Space X generated 18.7 billion in revenue last year that was up 33% from the prior year. In the three months through March, SpaceX generated 4.7 billion in revenue and a net loss of 4.3 billion, nearly the same size. The company also showed long term debt of 29 billion doll. Still, SpaceX is seeking a valuation around one and a half trillion. And that's on some of the conservative, the conservative side, based on some of the sources I've spoken with, that implies a multiple of 80 times last year's revenue. But there appears to be more growth coming down the pike. SpaceX said that Anthropic will pay $1.25 billion per month through May of 2029 as part of a compute deal that was announced earlier this month. And the capacity will ramp over the next few months at a reduced fee. And this agreement can be terminated by either side with about 90 days notice. Well, most of SpaceX's revenue currently comes from Starlink satellite business. It says in the prospectus that it has the largest actionable total addressable market, or TAM, in human history, which it quantifies at 28.5 trillion. And the biggest component to that TAM, the company says is from AI, which it estimates at 26 trillion and a half trillion. And that would span infrastructure, consumer subscriptions, digital advertising and enterprise applications. So this ipo, like many of the smaller listings that came before it, will hinge on the validity, or at least the investors perceived validity of these big dreams. Andrew.

[Joe Kernen]

So there's a whole bunch of other things in there to me that were fascinating beyond just the profits and losses, or in this case still the losses, but just what the revenue trajectory looks like. The idea of retail investors getting access early is fascinating and I think it's a big experiment. I'm curious what you're hearing on that front. There's the governance question. This is a company that is genuinely going to be controlled by Elon Musk, so much so that technically the company doesn't even need to have independent directors. And what you think that ultimately means, what are you hearing on those fronts?

[Leslie Picker]

Yeah, in terms of retail, I was told that it could be up to 30% of allocations could be retail. And they list a variety of brokerages that they'll be doing that through. Morgan Stanley is directing a lot of this program. Of course they own E Trade as well, so you can expect that to be a key component. I had also heard that retail across the pond in maybe the UK and Canada and Japan would be a key component of this as well. Kind of garnering retail Support not just here in the US but also abroad in terms of the governance very unique here, not unlike things we've seen at other Elon Musk companies. I believe he'll have about 85% of the control after this company goes public. We should get more details about governance too as the filing gets amended over the course of the next few weeks. That's something that has been out in the press for a while. Just the unique governance structure and the ability to remove Musk. It's something that some of the pension funds have really balked at. They're not buying buyers of IPOs, but they're buyers of indexes. And if this company is included in the index they could be essentially forced owners of SpaceX. And so they said that the governance structure that had been out there in reports is something they were not fond of. Whether it's enough to really prevent this company from filling its order book remains to be seen, but probably unlikely just given the nature that this is SpaceX, this is Musk, and people have really gotten used to that.

[Joe Kernen]

Leslie, let me ask you this about the retail piece of it. There's part of me that loves it in that the idea of democratizing an IPO and people getting access at least earlier than some of the institutions might otherwise and allocating it that way can be seen as a positive. At the same time, I think there's been a question about whether you think retail investors ultimately stay in. Do they have diamond hands, if you will. And the reason I ask is Bill Ackman ipo. Recently he taught, he actually approached it by trying to offer more shares early on to retail investors and they ultimately flipped it very quickly and it wasn't positive. And so I just wonder what you're hearing on that front.

[Leslie Picker]

Yeah, no, you're spot on there. And the old school playbook for IPOs, especially big IPOs, was to really lock up a concentrated book of allocations with long term holders that the bankers can trust and that they know won't flip it. Usually hedge funds were deprioritized. Retail was absolutely deprioritized. In big listings like this, 30% would absolutely be much larger than is typical for a deal of this size. Based on what I've heard there is of course the risk of them flipping. On the flip side, I think there's this idea that retail owns a lot of Tesla and therefore it would make sense to extend that to SpaceX. But to your point, we don't know what the float size will be quite yet, but based on the numbers that I've heard somewhere between $50 to $75 billion. And then if the valuation is, say, upwards of 1.5 trillion, you're looking at a really, really small float. And when you have a supply demand dynamic like that, you do risk additional volatility, especially if you don't have as great of a sense of the trustworthiness of the people who bought in at the ipo.

[Joe Kernen]

Leslie Picker, this is going to be a story that we're going to be following now for a very long time as a public company and as we get ready for when that happens later this month. Okay? Meantime, New York City Mayor Zoran Mandami firing back at Amazon founder Jeff Bezos after our interview yesterday when Bezos questioned whether raising taxes on billionaires would do anything to help working class New Yorkers. And here's what Bezos said and then we'll show you what the mayor said.

[Becky Quick]

I'm say that, you know, I don't pay taxes. So true.

[Jay Clayton]

I pay billions of dollars in taxes and it's a perfect again, if people

[Becky Quick]

want me to pay more billions.

[Jay Clayton]

Right, then let's have that debate.

[Walter Isaacson]

But don't pretend you know that this,

[Jay Clayton]

that that's going to solve the problem. You could, you could double the taxes

[Becky Quick]

I pay and it's not going to

[Jay Clayton]

help that teacher in Queens, I promise you.

[Joe Kernen]

And then in an early afternoon post on X, Mamdaami responded to that saying, quote, I know a few teachers in Queens who would beg to differ. Now, in that conversation, Bezos called repeatedly for eliminating federal income taxes on the bottom half of earners, saying that they make no sense. Guys, it says that that just represents about 3% of the total income that's brought in by the federal income tax. So it's an interesting political question and it's going to be interesting to see whether any politician decides to take it up. I would also mention on the Mamdani front, he has an apartment in New York and has said that he's prepared to pay to pay the Pied a terror tax, interestingly, despite others who've said that they would otherwise leave New York. So it's an interesting, it was interesting to see him agree for certain things. And by the way, you could argue that unto itself is to some degree progressive, meaning getting rid of that tax on those getting paid, call it under $100,000. Having said that, I also pushed him on whether he'd be prepared to pay higher taxes himself to make up for that. And he said that he'd be open for that debate.

[Becky Quick]

Well, I disagreed on the minimum wage point that he made. Wages should go where they need to go. It doesn't help any. I mean $7, whatever it is, you're going to 10. None of that. He pays 23 as he, as he made the. So it wouldn't even affect him. I will tell you, Andrew, I said, well said to my son. He's 24. He's everywhere on social media. And I go, well, I hope all your friends, all your crazy friends watch that. And he said they did. They decided that he should immediately be taxed 75% on his wealth. So that's still the stuff. There are still people that thinks he has this much and since he has so much that could go to such great use other places I was, my son was kid. But 75% should immediately be taken from him.

[Andrew Ross Sorkin]

I think that's what my mom Donny was saying in his response to this. By the way, this is similar to what we've heard from Warren Buffett in the past. He's talked about how the earned income tax credit should be lifted. That to that does take care of the bottom half. It's the same thing that Bezos is saying. If you make beyond below a certain threshold, you should be paying tax.

[Becky Quick]

There's some philosophical notion that's an easy fix, but there's a philosophical notion that everybody should have a stake and pay

[Andrew Ross Sorkin]

something into earned income tax credit. Makes sense because you are paying it in but you get it back. Tax credits at the end.

[Becky Quick]

Yeah. Instead of.

[Andrew Ross Sorkin]

But it also, it's also sanctity of work and having those dignity of work things that come along with all of that.

[Becky Quick]

Just weird that Bezos has done so much and the whole. It wasn't as much about Amazon and us and selling books online and logistically what it took to make that that work and all these, these Amazon warehouses, it wasn't, it was all about money and wealth inequality. And he's the guy that apparently, I guess what he's second richest guy in the world.

[Andrew Ross Sorkin]

Poster child over the, over the last decade. He himself told Andrew yesterday, you know, it feels different than it did a decade ago.

[Becky Quick]

Yeah.

[Joe Kernen]

I mean he's become sort of this avatar for wealth. And I think by thinking about look, I think he comes to this from a sort of first principles perspective, which is you could tax and maybe there's a point Joe, you would argue that you've made over the years. You could tax, you know, the wealthiest, all the. You could tax and take everybody's wealth. And if you did that, you would pay for the budget for, you know, some budget for one or two years, but not, you're not, it's not extraordinary amounts of money. And so should you be doing that or should you be doing something else? I think the good news or the interesting part about Jeff is that he's so willing and open to debate all points of it and has, has so many different perspectives, some of which align with a very sort of conservative Republican view and some which align with a very progressive Democratic view.

[Becky Quick]

But there was something, you know, both sides got obviously miffed. And the one thing that really missed the left, Andrew, is when you bring up that it's a spending problem and a waste problem and a government inefficiency problem. And you know what he said if, if Amazon was run like New York City schools, I don't know how that just off the top, he must have said it before because he had it all ready to go. They'd do this, it would take this long, cost that much and when you finally got the package, the wrong thing would be in it. But there is. We have Jay Clayton on. I got a text from Jay. Yes, I said when I'm on tomorrow, I'm finding so much inefficiency, fraud, so much that we raise and that hard working people pay into the till. You wonder why people are cynical. It doesn't get to where it's supposed to go. And that's what we need to work on. Not necessarily the revenues, maybe both, but definitely need to work on the spending side.

[Joe Kernen]

And Democrats, I think the ultimate would say on spending. The answer is I don't want to speak, I don't speak for Jeff. I do think he probably believes ultimately it's both. And while he said, you know, that you could cut 3% out of new York on a Tuesday, I think is what he said, if we had someone from Amazon go in and look at New York, you could cut 3% out on Tuesday. I would just also suggest, and we didn't get into it in that conversation, obviously Elon Musk went, went to Washington with Dogeco to try to do that. And there was this view that it was doable. And I don't know if you think it's the political machine, I don't know what you think the issue is or whether those quote inefficiencies aren't inefficiencies ultimately. But it proved to be very, very difficult. Challenging for what is ostensibly one of the most clever and interesting business people in the world who actually took the time to do it. So I only say that because while I think there's a lot of, we always say, oh, we could just cut 10% out of the system. And it's very hard to do that for a lot of reasons.

[Becky Quick]

A lot of the entities that say it's not possible to do that are in a position to make it not possible to do that. And the people that you're after are going to. That's what happened with Doge. Look how hard it was. Look at the fallout if you cut $10 million from something you heard about it, that people were going to die.

[Joe Kernen]

Sure. Because 10 million DOL. Because that $10 million to you could be waste, but to somebody else is not. And that, that is why it's such an, it's such an intractable question.

[Becky Quick]

Right. We got to train those fruit flies on gender issues in Southern Africa or something. They've got to do some research to make sure that's that's what we're talking about.

[Joe Kernen]

Andrew I don't think that's what we're

[Becky Quick]

talking about, but it's some of it.

[Jimmy Uso]

Sure.

[Joe Kernen]

Teas will be next.

[Katie Kramer]

Coming up on Squawk Pod. U.S. attorney for the Southern District of New York and former SEC chair Jay Clayton joins us how he is thinking about a key taxing headline.

[Jay Clayton]

Anybody whose tax returns have been intentionally leaked should have recourse against the government.

[Becky Quick]

10 billion, $10 billion worth of recourse.

[Jay Clayton]

Should President Trump have to say, you know what? No, I'm the president, then he can

[Becky Quick]

settle with himself with his own government. It just, it doesn't smell right.

[Katie Kramer]

That conversation awaits you right after this.

[Jimmy Uso]

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[Katie Kramer]

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[Joe Kernen]

Stand Joe by 5 seconds. 4, 3, 2 Wipe up to him his mic. Q.

[Becky Quick]

Join us now. Jay Clayton, United States Attorney for the Southern District of New York and a former SEC chair. We are going. Oh, we're not going to take a quick break now. We could get it out of the way and just let you talk because I asked you a question and we want you to opine. I heard from you yesterday. Everybody was riveted to Andrew's interview with Jeff Bezos and I was talking about it earlier on the show. I'm sure Andrew wants to get involved. I was saying it. There's one side that doesn't want to hear that we're already spending too much because they've got another 10, 15, 20 things that they want the government to do before we really get things all fixed so there's not be any spending cuts if they had their way. Your point is what? We're probably at maximum revenue right now in a lot of places. And it's got it's only one way or the highway. It's got to. We have to cut spending or get rid of waste or become better at what we do in terms of the government.

[Jay Clayton]

Yeah. First of all, that was a fabulous interview. I was sort of getting ready to go to work and I was late for work because I watched the whole thing. Yes, tremendous. And you know the fact that criminal

[Becky Quick]

get out at did not get prosecuted yesterday because you're watching Andrew.

[Jay Clayton]

They don't get out of bed early

[Becky Quick]

enough right there sleeping in.

[Jay Clayton]

But look, he was so candid and so clear on a lot of these things and a lot of things that we don't talk about. You just raised one. It used to be that we talked about what would be peak revenue in terms of taxes. Now I believe that if you raise taxes much more In New York, in a couple of years you'll have less revenue because flight and, and all of those things. And, and that's been proven over time. So, you know, like, I think we're about close to peak. What I liked about Jeff's talk is he was like, look, I don't mind paying, I don't mind paying what I'm paying right now. I do mind the way you're spending it and the incredible waste. And this is where what I'm seeing in my job is very.

[Becky Quick]

Why are you seeing that there's waste and where do you see it? Well, in your day to day operation?

[Jay Clayton]

Let's look at the New York Housing Authority. NYCHA.

[Becky Quick]

Yeah.

[Jay Clayton]

We indicted 70 people for bribery and related charges. And if you look at what the New York City Housing Authority spends each year on capital and on day to day run rate, it's in the tune to $12 billion here. Yeah. Do you think that the 500,000 or so people that are living in public housing in New York feel like they're getting $12 billion worth of value a year? Absolutely not. It is, I mean, it is ridiculous. Jeff Yass had a great op ed in the Wall street journal about 42, $44,000 per pupil in New York. The results are terrible. And he said, look, look at it this way. If you took half of that each year and put it away at 2%, not at 8% or some kind of pension level, but at 2% at the end of the 13, 13 years of that education, each child would have over $300,000 and you'd have $22,000 a year to pay for school, which I will bet you they could get a better education for $22,000 with vouchers. That's the kind of waste that we're talking about.

[Andrew Ross Sorkin]

Now where's the problem? Where are the actual problems? Like what is it? Bezos didn't think it was teacher salaries. They're not getting paid enough. He said, where, where does that money get siphoned off?

[Jay Clayton]

Look at the level of administrative change in schools over the last 20 years. The number of administrators versus the number of teachers. It is, it has exploded also, you know, who, who is contracting to pay for? You know, who's contracting with the schools to provide meals and provide services and all of those things. Are those contracts really being bid out efficiently? No, that's what we were looking at at the Housing Authority. We brought charges. You know, that's, those are the kinds of things. And let me say, I think there is light at the End of the tunnel. AI is going to affect business like you talk about on this show all the time. The place where it's going to have a profound effect is in the public sector. What it used to take for us to uncover Medicaid fraud and Medicare fraud. Teams of people going through paper and the like. As long as it's digitized, you can use the new tools and find in days what used to take months. Now, watch this closely. Our municipalities, our cities, our states actually going to collect and provide the data. One of the problems you have in detecting fraud and detecting waste is it's difficult to tell the difference between incompetence and fraud. And the way to do it is to have good data.

[Becky Quick]

Andrew made the point. Andrew, I know you're listening closely, but Elon Musk was retweeting some or at least commenting on the Bezos interview and said, yeah, he's right. But Andrew points out what happened with Doge. You go in, you try to do it. It's a lot harder than it. They gave up, finally threw up their hand, said, look, Doge was, Doge was a great start.

[Jay Clayton]

It really was. It showed that you could, you could look at data and uncover things that just don't make sense. Medicaid, there are tons of things going on in this city. We're going to find them. If you, look, I'm telling, telling people right now, if you, you are committing Medicaid fraud. If you're, if you're saying, I'm doing a job over here on Monday and I'm doing a job over here on Monday and I'm collecting for both. We want to find you because you know what? New Yorkers want us to find you. They know health care costs way too much, and one of the reasons it costs way too much is fraud.

[Joe Kernen]

But, Jay, is that a. Is you believe that this is more acute at the state or city level than it is at the federal level. And the only reason I raised it is for a long time on the federal level, we used to, to say in the same way that Jeff saying, you know, we could cut 3% on a Tuesday out of the budget, and you'd like to think that that's possible. And yet Elon brought in his whole team, spent a year trying to do it at the federal level. And I think ultimately it was like point 1% or something. That was just the challenge of it was, was so great in large part because for everything you're taking away that, that to some, to one person looks like a giveaway or something. That doesn't make sense. It's taking something away from somebody else. And that's what makes this so challenging.

[Jay Clayton]

Andrew, let's just stipulate that I'm not talking about cutting any benefits. I'm talking about cutting out fraud, theft, cheating. That will make a big difference. It will allow for better delivery of services. And your question about state and federal. There are areas, Medicaid being one of them, where it's not actually in the state's interest, although they are the deliverer of care and the administrator of it. It's not necessarily in the state's interest to catch fraud or to drive efficiency because they get federal matching dollars. One of the problems that we've seen with our health care system and the government's involvement in our health care system is it's a cost plus system. So everybody involved is very happy for costs to keep going up.

[Becky Quick]

Last week was a different world. And I heard from you then as well. Who was this guy?

[Jay Clayton]

Al Saudi. Yeah.

[Becky Quick]

And how did this come about? And wreaking havoc for four years. And finally he's, he's, he's done right?

[Jay Clayton]

Well, look, tell the whole story. International terrorist. Okay. And he is here now in America. He is facing charges in America.

[Becky Quick]

Is he Iranian or Iraq?

[Jay Clayton]

He operated out of, out of Iran. And the complaint alleges that he was providing material support to a number of the terrorist organizations that you talk about on this show from time to time, including the irgc. And I always need to emphasize this, that in America you are innocent until proven guilty. But he is here to face charges. And the charges as laid out in the complaint are supporting terrorism, terrorism across Europe and attempted terrorist acts here in the United States, including in Los Angeles and here in New York, radicalizing people online. The complaint is available on our website. I would encourage people to look at it because it gives you a flavor. Stepping back for the type of activity that our enemies engage in, using social media, using crypto currencies, using new tools to radicalize people in America, to rattle. Radicalize people, people in Europe to commit acts of terror. That's a reality. It's something we're fighting against. Only this country could bring this man to justice. The strength of, and I'll give President Trump incredible credit here, his respect on the world stage, across all these areas is what drove us to be able to bring this man to justice. We got unbelievable cooperation to get him here and to demonstrate to the world that if you, if you engineer attacks against the United States, you cannot hide from us.

[Becky Quick]

What do you think what do you know that he, that, that was in the planning stages in this country? I don't, I guess I like to scare myself. But, but because they're still out there.

[Jay Clayton]

No. Again, you can look at the complaint. Radicalizing someone in the US to bomb a synagogue or to do harm against a synagogue, that was one of, one of the attempts that was here in the United States. And if you look across Europe in the complaint, we show that there were a number of public attacks on people in Europe that these organizations engineered.

[Becky Quick]

We have been reporting that oil went back up because apparently the Supreme Leader, I don't know, I thought he was in a coma, but supposedly he said that they're keeping the uranium, the enriched uranium, they're not going to send it to another country. You've seen the back and forth. The President keeps saying we're this close to just giving up on negotiations because you know how these people operate in Iran. You talk to him. I mean, what, how do you see this in your view? It's just your opinion. I know, but are we finished with military endeavors there or is this.

[Jay Clayton]

No, I don't.

[Becky Quick]

Is Israel and the United States going to have to go back in here and just. Much harder.

[Jay Clayton]

Here's what I do know. And again, this is my view, but it's come to the fore. 47 years of terror, the type of person that we just talked about is way too long. People who believe in that kind of terror and support that kind of terror cannot have a nuclear weapon. I very much believe in finishing the job. That's on the nuclear side. That's my, my personal view. On the other side, the strait, the fact that, let's pick a number, 20 million barrels a day is somehow controlled by this radical state that believes in terror, that believes that Western civilization should be eradicated. That's a, that's a 47 year mistake or a 30 year mistake or whatever it is, and we need to correct that.

[Andrew Ross Sorkin]

I was kind of amazed reading overnight because I'd been kind of wondering why they hadn't done this. But apparently they have been working on this. There's a pipeline that the UAE is building to, you know, subvert the Strait of Hormuz that would go straight into the Gulf of Oman. They are apparently halfway finished with it now and they plan to have that open by 2027, which takes away another leverage point from Iran. And if to me, that was more of the reasoning behind why Iran might have said we're not giving up this enriched uranium because the Strait of Hormuz is Their biggest leverage point at this point, if they don't have that and they don't have any uranium, they don't have any leverage left.

[Jay Clayton]

Right. And I don't think we want them to ever have leverage again. Becky, you point out something that we didn't know six years ago, seven years ago. Now we know, which is how amazingly nimble the US Economy is. And to, to extend it to the global economy to think that people find a way. People find a way. We found a way from it. We're finding a way. Like they're going to lose their leverage one way or another because the world is not going to let them have it over the long term.

[Becky Quick]

Sounded like Jurassic Park.

[Andrew Ross Sorkin]

Nature finds a way.

[Jay Clayton]

Nature find a way.

[Becky Quick]

Nature finds a way. I saw. Go ahead.

[Joe Kernen]

I don't know. No, I was going to pivot to a different topic. If you were still on, still there. But were you moving to Maduro? Is that where you were going?

[Becky Quick]

No, I was going to Cuba because that's what we did with him. We found, you know, we got a good reason to indict him and then we can go down and snatch him. Yesterday we decided we're going to indict the gentleman in Cuba for murder from years ago. And I'm just wondering whether this is going to open another front where we're going to be involved with Cuba, but take it wherever you want to go. Andrew.

[Joe Kernen]

Look, Jay, I was going to ask you, and you may not be able to answer this question, so you can, you can, you can wave it off, I guess, given who your bosses are. But I was just curious what your reaction was to the settlement between the president and the irs. But maybe more importantly, this fund that's been created, this $1.8 billion fund that's been been created for victims of weaponization, there's been lots of questions about it, questions about, you know, how the president could reach a deal with a government or an administration that he controls, how you think the public should think about the credibility of a deal like that, and then how this fund may or may not work, given some of the things, including Pam Bondi's memo last year suggesting that a fund like this shouldn't exist.

[Jay Clayton]

Let me, let me take a step back and tell you the way I look at this. As the U.S. attorney for the Southern District, when we are investigating people and bringing charges against them, criminal charges against any individual from a financial point of view, can be absolutely devastating. And one of the, one of the huge things you have to think about is, do I have Enough here is this to bring criminal charges and put somebody through that kind of financial route. It's a reality. And if, and if people have been pursued inappropriately, that financial cost. I'm supportive of there being relief for that financial cost.

[Becky Quick]

I think the vice president went through. I was looking up, I don't know where I saw it today, but the first gentleman that's going to file for damages, some guy who was totally harassed during the. By the Biden deal. I don't, I didn't read the specifics. I don't have it. But that's the very. It's not, look, it's not people that beat up cops at J6. Those are people we're talking. You have. The media will immediately say, that's getting.

[Jay Clayton]

Let me do something and try and take the temperature down and take this out of the current context.

[Becky Quick]

Yeah.

[Jay Clayton]

And say that this does happen. We had a guy here in New York, Elliot Spitzer, Eliot Spitzer, pursued people inappropriately, I think, to the extent that many would say was unlawfully. Lawfare happens. It should not even think it happened to Trump.

[Becky Quick]

And that's why what I'm trying to

[Jay Clayton]

do, Joe, is just say, look, it happens. It shouldn't happen. It creates financial ruin. You have lots of people on this show who are incredibly respected who went through this.

[Becky Quick]

Here's the way I said it yesterday, being pursued.

[Jay Clayton]

So it, it does happen, and it shouldn't happen again.

[Becky Quick]

In agreeing with Andrew here on this, the president feels wrong. Before he was president by the irs, he hated the irs, and he probably. There's some merit to how he feels about this. So at this point, I said the president sometimes will do things because he can. And the attorney general is the only guy that could have done this, that could have put off the audits and gotten rid of the old audits, and there might be 100 million there for a double. I don't know what it was. The New York Times reported maybe there would have been $100 million worth of damages possibly to the president. So he's able to do this with Todd Blanche, who was his personal attorney. He can do it fine. And I think he does it because he can. But it doesn't mean that it helps matters in terms of perception for someone like you, that has to defend.

[Jay Clayton]

No. Look at it this way. Anybody whose tax returns have been intended, intentionally leaked should have recourse against the government.

[Becky Quick]

10 billion. Was it $10 billion worth of recourse?

[Jay Clayton]

Should, Should President Trump have to say, you know what? No, I'm the president Then he can

[Becky Quick]

settle with himself, with his own government. It just, it doesn't smell right. Even like conservatives like Andy, they're looking at this and like it seems a bridge too far.

[Jay Clayton]

Well, did he get any money out of this?

[Becky Quick]

If you believe that one of those audits would have come up with 100

[Jay Clayton]

million of he get any money out of his tax returns being leaked by

[Becky Quick]

settling and putting this provision to not look back at his audits, he could

[Jay Clayton]

have said, would you take that settlement? I'd take that settlement on either side.

[Becky Quick]

Trying to help you here, Andrew. And you're silent.

[Joe Kernen]

I'm trying to understand why you say, look, my question is slightly different. You said you take the settlement on either side. And I'm just trying to understand why you take the settlement on either side.

[Jay Clayton]

Because for both sides. For both sides, it ends. But that's what I'm saying.

[Joe Kernen]

Pretend it's not the president. Pretend it's me.

[Becky Quick]

Yeah.

[Joe Kernen]

Why? And let's say you thought that I was a tax cheat. Why would you. I'm not saying that he was a tax cheat. I'm just saying, let's say you thought that I owed the government money. Wouldn't you want me to pay the money? Why would the government not want me to pay the money?

[Jay Clayton]

Andrew, we have two things going on here. We intentionally leak your tax returns to embarrass you in the public. You have a claim against us. There's an audit that we don't know whether there's money owed or not owed. To resolve that, we say, you know what, Andrew, we're going to drop the audit. We're going to move on and you're going to drop your claim against us for trying to name and shame you. That's a deal. I think that, you know, is actually a pretty good deal for the government. If the government intentionally leaked somebody's tax returns, that's a horrible thing.

[Joe Kernen]

Do you think it's any different? I don't. Look the leaking pieces. I agree with you 100%. The only question I have for you that relates to this is whether you think being in the position of being the president changes that dynamic at all.

[Jay Clayton]

I do. What do you. Is the president supposed to say, you know what, you can do whatever you want to me and I have no recourse. And it was done when he was a private citizen. I don't think we're going to be.

[Joe Kernen]

No, no, no. I just. I just wonder maybe there should be a.

[Jay Clayton]

This way.

[Joe Kernen]

I don't know if it should be a third party that Makes the decision or something like that.

[Jay Clayton]

I don't think we're going to be talking about this issue in a week because the American people are going to say, look, they leaked his tax returns. They tried to name and shame him. They tried to destroy him. Okay, we resolved that in terms of the audit that had been going on for years with obviously, you know, no findings today. That's gone. Let's look forward this. As I read the settlement, the audit going forward, the tax returns that are filed going forward are subject to the same scrutiny as anybody else.

[Becky Quick]

Just in the past.

[Jay Clayton]

It's in the past.

[Becky Quick]

And presidents get, by law, get audited every year.

[Jay Clayton]

What I love is everybody's like, let's just move on. And then when we move on, people like, I don't like that we're moving on.

[Becky Quick]

You a lawyer?

[Joe Kernen]

Look, I'm not. I have no idea what's in the tax returns. And I'm not. I'm not arguing that. I'm not arguing we should be doing one thing or the other. I'm just suggesting that. I think because of the perception of it, there's a question about how it should be done. That's the question.

[Jay Clayton]

Yeah. I think the American people are going to be satisfied.

[Becky Quick]

And that's what I mean. I think the President is so po'd at what was done to him that if he can do something, he's not even going to care about. He doesn't care about the repercussions at this point. Andrew, I really don't think. I really don't think he does.

[Joe Kernen]

No, I think that's. I think that's probably right. I mean, I think that's how I imagine he feels. I'm not disputing that.

[Becky Quick]

All right, so do you do private practice? If I get in trouble for something, can I. I don't know what it's going to be. I'm just preempting it. Actually, I have your phone number. Yeah, I know where to reach you. Thank you. Because you're good. All right. Thank you.

[Jay Clayton]

Thank you. Always good to be here.

[Katie Kramer]

Next up on Squawk Pod, we're going to the movie Moon again. Jeff Bezos and Elon Musk both have big ambitions for space, but Musk is making an IPO pit stop first. His biographer Walter Isaacson joins us.

[Walter Isaacson]

He focused ever since he was a little kid on Mars. Occupy Mars was the mantra. He has pivoted some in the past year or two to say, all right, let's build a base on the moon first.

[Becky Quick]

Foreign.

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[Katie Kramer]

You're listening to Squawk Pod Today with Joe Kernan, Becky Quick and Andrew Ross Sorkin. Joe and Becky were in New York City today and Andrew, well, he's fresh off a day with Jeff Bezos at the Blue Origin Rocket park in Florida.

[Joe Kernen]

Guys, you know, being there was just, I must tell you, we keep talking about the scope and the scale of it and it's so hard to believe we saw so much yesterday. You know they're planning to land on the moon later this year. He talks a lot about, by the way, trying to get to the moon, get to the moon quickly, especially in the competition between the US And China, trying to get to what he calls the high ground, if you will. So I do think we should expect a landing possibly on the moon later this year. And of course New Glenn is going to be up in the sky soon in this big competition with SpaceX, especially as SpaceX is going public. But that team, it's remarkable just to see what they're building down there and what the future of all of this ultimately looks like. And you can find the rest of that conversation so much more on cnbc.com so do.

[Andrew Ross Sorkin]

Check it out, Andrew, when he says the race to get up there and claim the high ground, that means claim areas of the Moon before China's able to kind of mark it as a US Territory.

[Joe Kernen]

Look, the politics of being on the moon are complicated. I think what's happened at this point is, you know, if you can get to the moon and claim your area of the moon, if you will, from a national security perspective, it's a super important thing. And, and whether it's ultimately Space X that gets there or whether it's Blue Origin. I think just from a national security and competitiveness standpoint, there is a view that we, the United States, needs to get to the Moon and stake out that territory. Especially because he often talks about, you know, lunar permanence. I think we mentioned this yesterday on the show, this idea of using the Moon to then be able to go to Mars and to be able to go to other places almost as a way station on the way there. If you can get out of orbit, it actually makes everything that much more, that much easier. You could manufacture certain things on the Moon and the like. So there is a race, if you will, just to do that.

[Andrew Ross Sorkin]

As we speak, Walter Isaacson is here. Obviously, he's Elon Musk's biographer, and we're going to talk to him about SpaceX and this IPO. But Walter, I see see you shaking your head, nodding about this race to get to the moon.

[Walter Isaacson]

We've gotten to the moon before. We did it more than 50 years ago, supposedly.

[Becky Quick]

Supposedly?

[Walter Isaacson]

Yeah.

[Andrew Ross Sorkin]

For real.

[Walter Isaacson]

But what we're going to do now, as Andrew said, is put a base on the moon, a permanent base on the moon. And it's interesting because it's not just. It's not really a race between Space X and Blue Origin. Musk and Bezos, they're both working with NASA doing the human landing system. NASA's got this huge Artemis project, and I think that by, you know, space will be the new AI by 2027 when they start building this base there.

[Andrew Ross Sorkin]

Where, Where's China on this?

[Walter Isaacson]

China's a little bit behind at the moment, but they're going to an easier place on the moon to try to build their base. I think China will be there with a base by 2029 or 2030. But that sure lit a fire when Jared Isaac, man, the very charismatic, smart New head of NASA, went to Capitol Hill and it's like, hey, here's where China is. So just like Sputnik going up when I was a kid helps us get to the moon. I think the race with China and in some ways the competition, but collaboration between private companies, space X Blue Origin, NASA with a great NASA administrator is going to be the most exciting story in the next three years.

[Andrew Ross Sorkin]

Yeah, I mean, all of these things seem real. Just the idea of data centers, space, which I didn't believe when I first heard them years.

[Walter Isaacson]

You know, one of the funny things about Elon Musk to get to his IPO is that he decides he wants to go to space and then eventually, eventually backfills with really, really good business models like, oh, I can put up 10,000 satellites and recreate the Internet now to space. And now in the past year it's oh, we can put data centers in low Earth orbit. We can maybe even put them in the moon. So these are when he talks about a total addressable market in that IPO

[Andrew Ross Sorkin]

document, what was it, $29 trillion.

[Walter Isaacson]

You know, that sounds pretty insane.

[Andrew Ross Sorkin]

The size of the US GDP last year. It's a quarter of the global.

[Walter Isaacson]

Yeah, but, but this is bigger than the us. This is, you know, solar system. Well, not quite. Let's stick with our solar system.

[Andrew Ross Sorkin]

Well, let's talk about that space X IPO and what we learned in this. They are shooting for $80 billion or more in money that they raised to give the valuation, the company a valuation of 100 or one one and a half trillion dollars, potentially making Elon Musk the world's first trillionaire. When you first started your autobiography, when you first started with Elon Musk or your biography of Elon Musk, when you first sat down with them, were these things that you thought were realistic goals? How many years ago was this and where are we now?

[Walter Isaacson]

Well, one of the goals he had then was to make humans multi planetary. And the interesting thing is he focused ever since he was a little kid on Mars. Mars, Occupy Mars was the mantra. He has pivoted some in the past year or two to say, all right, let's build a base on the moon first. So these are the type of things he's able to do is pivot. But yes, this will be $1 trillion for him. And it's almost like he's playing a video game. It's not like he uses that money to put buy yachts, even pokes fun at Bezos for spending all his money. Elon just wants to Hit a trillion as if he's playing Elden Ring or Polytopia or trying to rack up points in a game.

[Andrew Ross Sorkin]

Yeah, the biggest scoreboard wins I suppose.

[Walter Isaacson]

I guess so.

[Andrew Ross Sorkin]

But did you believe it? First of all, when did you start on your biography of him? How many years ago was this?

[Walter Isaacson]

I started around 2020 and I certainly believed in the Falcon 9 rocket which Jeff mentioned in his interview with Andrew, which is this workhorse rocket. I'd say it go up what I did not believe and there are many things I didn't believe. When he first he said we're going to land it upright, right, and just reuse it. Nobody else has done that. China hadn't done it, NASA hadn't done a Boeing. And then he said we're going to land it up right on the launch pad and catch it with these mechazille arms. And I'm saying all right, excitement guaranteed. But you know, and even things like totally full self driving cars, I'm never a believer until suddenly I see it, right.

[Andrew Ross Sorkin]

I have to say I've gotten dragged kicking and screaming kind of along the way to these things too.

[Walter Isaacson]

So when you look never bet against them though. I mean exactly.

[Andrew Ross Sorkin]

When you look at the SpaceX prospectus, what do you see in it that sounds fantastical? What do you see that maybe something some people think is fantastical but you might think is real based on what you've seen accomplish to this point?

[Walter Isaacson]

I think what's fantastical is this notion of building data centers in the near term in low Earth orbit or on the moon. But it makes a lot of sense your energy costs and by the way with all the backlash against data systems, I mean data center back sensitive. So I think we're going to need these huge data centers. This was not a market anybody knew about three years ago like huge data centers that needed enormous amounts of electricity. That's part of the addressable market in the IPO for Space X. And I think Bezos told Andrew, hey, that's not quite as going to happen quite as quick quickly but, but Elon has been able to make the impossible merely the slightly late Andrew.

[Joe Kernen]

Well that's what I was going to say Walter. I mean I think there's going to be a lot of excitement around this particular IPO and trying to but try to make the math work not just over time. I think directionally it's going to obviously be a huge, huge company that's going to have enormous success. The question is, does the success come as fast as Elon wants or in Some cases needs it to depending on how quickly data centers get to space, what they're able to do on the moon and there's all sorts of other products and we talked about it with Jeff yesterday, that may ultimately turn out to be real. People talk about putting mirrors in space that effectively direct sunlight down to solar so that you have solar 24 hours a day. I mean there's all sorts of things that could come but the question is sort of how quickly they come and recognizing that there is, you know, going to be big losses along the way.

[Walter Isaacson]

Well, first of all, Space X has huge amounts of revenues along the way including I think $1.25 billion a month from Anthropic just for the least. And then you talk about things you may have happen easily soon. I mean I've got Starlink on my phone here.

[Andrew Ross Sorkin]

Year start 11.4 billion in revenue.

[Becky Quick]

Yeah.

[Walter Isaacson]

And soon the direct to person cell phone market, maybe not in Manhattan, but in Louisiana where I live, that's a huge market that hadn't been thought of too much before. So I think the potential for near to medium term revenue is much higher than you made it sound like in that question.

[Andrew Ross Sorkin]

Hey Walter, the risk factors that.

[Joe Kernen]

No, no, no, I think the revenue.

[Andrew Ross Sorkin]

Go ahead, go ahead Andrew. I think there's a delay.

[Joe Kernen]

Oh, I was gonna say. No, no, I think the revenues are going to be off the charts. I mean one of the things that Bezos and I were talking about just yesterday is just the pent up demand for service right now there is not enough rockets that can get to get to space fast enough. So you're actually. The demand is real. That's not absolutely.

[Walter Isaacson]

I think SpaceX will be giving would be selling Jeff Bezos some Lyft capacity capacity. But yeah, you're saying that the law. The losses will be there too.

[Joe Kernen]

Well, no, my question is just how quickly you think they'll get to profitability and maybe how much the investor community will care. I mean one of the things that's been amazing and it's to to Elon's credit is actually you know how there have been periods of time where the true believers have held on to Tesla and he has been right. But there were these sort of tough periods along the way and I'm only raising that as a question because you're going to have a big retail community I think that's going to try to get into this early and it might be volatile.

[Walter Isaacson]

Well, it will be volatile and if you look at the board that he has for the Space X IPO it's people have been with him since the very beginning. Put the money in Tesla, put the money in Space X and boy they are going to be paid off well. So I think the main volatility comes from, from the cost that comes from the AI part of Space X. Now that Space X is Space X AI and he merged his AI company into it. But once again you're going to see new markets including physical world AI, robots, self driving cars, AI that absorbs, you know, visual information and can and walk around. That's why I do think you'll eventually see a combination with Tesla and Space.

[Andrew Ross Sorkin]

That's what I was just going to ask you. Dan Ives is thinking that the combination between the two comes in 2027. You think it comes that quickly and yes, you do.

[Walter Isaacson]

Oh, 2027, yes, yes. Yeah. I mean first of all it's already almost happening. There's so much stuff going back and forth, engineers back and forth. The buying of Tesla cybertruck to space. In other words, he, he kind of melds his two companies and I think it makes absolute sense because with Andrew's good question of how do you make up for some of the huge investments that keep the profits down, I think you have to also have the revenue streams.

[Andrew Ross Sorkin]

What would that do to his ownership stake? Because I think its voting stake of about 85% which space X. And that's been very important to him wanting to have a controlling voting stake.

[Walter Isaacson]

It.

[Andrew Ross Sorkin]

Will he do that with Tesla getting wrapped in?

[Walter Isaacson]

He will. I mean he won't wrap it in unless he has some sense of control. Now he makes fun of Mark Zuckerberg for having totally two classes of stock where you can never oust Mark Zuckerberg. He just says I want sort of, you know, some sort of strong control but if I go nuts, it's fine if the shareholders oust me.

[Andrew Ross Sorkin]

Okay. The key, the key man factor, the risk factors that they lay out in the prospectus, one of them is Elon Musk himself. First of all, he's a key man. The company is entirely dependent on him. Also says that by the way, you're not going to get his full attention because he has Tesla, he has the boring company, he has Neuralink and all these other companies. And then it also says, you know, he draws a lot of public attention with his actions and his words and those could impact the company as well, either to the good side or the, or the bad side.

[Walter Isaacson]

I've written 600 pages on this. It's ever been thus for the past two decades. He's always been the key man. He's always drawn lightning and criticism for various things you do see. However, if you go. I'm going to go down to Starbase soon just to see one of the starship launches. If you look at Space X quietly behind the scenes, Gwynne shot well. She's truly a great manager. You have Bill Riley and Mark Giancosa who are great at propulsion and rockets and figuring out Starlink and how it works. They're not generally in the limelight, but you got a lot of good people running that company.

[Andrew Ross Sorkin]

Walter, thank you for joining us this morning. Hey, fun Walter is Isaacson name dropper,

[Becky Quick]

not one of the person that you're talking about.

[Andrew Ross Sorkin]

Glenn shot well.

[Walter Isaacson]

Glenn shot well.

[Jay Clayton]

You're right.

[Walter Isaacson]

Have you been on the COVID of Time?

[Becky Quick]

But you can go deep in. I'm sure you go deep into all these companies probably, don't you?

[Walter Isaacson]

I don't. Yes, definitely. But I don't think there's a person you've probably never heard of, Mark Giancosa. He'd be upset if he knew I mentioned him because he gets really low.

[Becky Quick]

Second time you've mentioned.

[Walter Isaacson]

That's the amazing genius. And he and his friend Bill Riley down there in Starbase Texas, you know, they're not. It's Elon driving this. Elon figuring out even how do we do the heat shield on the Raptor Engine Starship. But these people are good.

[Becky Quick]

You know what I'm most excited about? Your autobiography of me.

[Andrew Ross Sorkin]

Just which I said at the beginning.

[Becky Quick]

Yes. It's not.

[Andrew Ross Sorkin]

I said you're not announced.

[Becky Quick]

It's not out yet myself.

[Walter Isaacson]

It's not, you know, you don't do it.

[Becky Quick]

I might do it now.

[Walter Isaacson]

Those of us who cover people in the arena don't fall prey to the conceit that we're in the arena.

[Katie Kramer]

And that is Squawk Pod for today. Thanks for listening. If you want more, Andrew Ross Sorkin's interview with Jeff Bezos on the Blue Origin factory floor lives in its entirety right in your Squawk Pod feed. It should be the podcast just above this one. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern to get the smartest takes and analysis from our TV show right into your ears. Please follow Squawkpod wherever you get your podcasts. We'll meet you right back here tomorrow.

[Joe Kernen]

We are clear. Thanks, guys.

[Walter Isaacson]

Foreign.

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