73. A man who means business on Mars
Space X.
After making $200 million from PayPal in 2002, Musk turned his attention to Mars.
And he began to dream.
Sending humans to Mars.
At the time, it was a pipe dream, and the reaction was that it was just another eccentric billionaire.
However, this madman’s indomitable will and persistence made his dream a reality.
Even when his third rocket failed in 2008 and he was forced to take a low-cost airline flight because he couldn’t afford a private plane, he never gave up on his dream.
Eventually, his fourth launch miraculously succeeded, and in December 2015, he became the first person in human history to launch a Falcon 9 rocket, put a satellite into orbit, and then return the rocket to the ground with its first stage propellant intact.
Musk’s dream is no longer a pipe dream.
I’ve been interested in rocketry since I was a kid, and I thought it would be after I died that a private rocket company would emerge and make space travel a reality.
However, when I watched the video of the Falcon 9 rocket descending and landing in a gentle manner, I felt a shiver run through my body and immediately fell in love with the Falcon 9.
Space travel!
I thought, “If I’m lucky, I can do this before I die.
At the time, I had already won the US Powerball, so I didn’t have to worry about money.
I also researched Space X, the company that had pulled off this incredible feat, but damn it, I couldn’t even dream of investing in them.
Musk, the freaking control freak, owns a whopping 54% of the company!
How is this possible for a company that was founded in 2002?
A company that, until 2015, had raked in astronomical amounts of money and had no revenue, except for billions of dollars in NASA funding?
And the equity wasn’t just equity.
It was a 78% stake with differential voting rights.
That’s more than you can say for a private company, so you can see how obsessed this guy was with protecting his stake for decades.
Also, when I asked when they were going to go public, Musk said they weren’t going to go public until they sent a man to Mars.
So, for me, who was trying to grow my assets by buying and selling at the time, it was a stock that I couldn’t touch, even if I wanted to sell it.
Eventually, I decided it wasn’t for me and forgot about it, but then this opportunity came along.
As Musk and I split three bottles of liquor, my mind kept trying to wander, but I clutched my thigh to keep myself together.
The way Space X is growing right now, this is the last chance.
Perhaps we’ll never get another chance to dip our toes in the water.
Wake up! This is a real opportunity!
Now, don’t get me wrong, I’m not a military nerd, I’m just as crazy about space and rockets as he is.
Musk is also an unusually ruthless businessman.
If he knew about my original interest in Space X, he wouldn’t be able to get a good deal even if he did get a stake.
Even if you don’t take Musk at face value when he says he won’t go public until he sends people to Mars, which is what he’s said in the past, his aversion to going public means he’ll delay it until as late as possible.
That would effectively tie up his money for a long time, so he can’t afford to pay full price.
As always, it was a matter of getting it as cheaply as possible.
“Elon, what can you do to show me good faith? You don’t have anything except your Tesla shares, do you?”
I said, looking as sullen as possible.
Immediately, Elon had a seizure.
“What do you mean, how many companies do I own that aren’t Tesla?”
“What? I knew all about you by the time I was thinking about investing in Tesla. OpenAI? It’s semi-non-profit, and you’ll have to wait a hundred years to see if it works. And what else? Oh, it’s a computerized bashing of human brains.”
“It’s Neuralink! And it’s not a computer, it’s a brain-computer interface!”
“Oh, well, that’s what it is. It’s like your hobby, isn’t it?”
“A hobby? How important is it to the future of humanity?”
“Don’t you think you’ve been watching too many science fiction movies and novels? To be honest, how long do you think it will take for the Neurilink to get off the ground? Besides, there are ethical issues that need to be addressed.”
“…”
Musk trailed off.
Honestly, New Relic seemed like a step too far, especially with the ethical resistance.
“And The Boring Company, that’s a complete sham, I heard it took ten times longer to build the tunnel than the old Dover Channel tunnel, so what’s left?”
“Why don’t you include Space X? Space X is still valued at over $30 billion in market value today, and in terms of future value, it’s a bigger company than Tesla?”
I finally got Elon to mention SpaceX.
The business is now.
If you do well here, you can really rip it off.
But I don’t want to undervalue it too much, and I don’t want to overvalued it too much, because I’m not going to get anything out of it, so it’s a good middle ground.
“Space X? Yeah, that’s at least a company.”
“It’s not a company, it’s a company with a great future, what’s wrong with you?”
“What do you mean, a company with a bright future? They blew up a few years ago and ate a Facebook satellite and haven’t been able to launch in a while, now that you mention it, is that fixed?”
“What do you mean, when was that? It’s all fixed?”
“Yeah? Well, that’s great, then why are you bringing up Space X? You’re all over that company. You said they’re not even going public. No, they’re going public when they send humans to Mars. Come on, Elon, don’t you think that’s a bullsh*t, irresponsible thing to say?”
“Watch what you say, Alex!”
“Huh?”
Musk actually stiffened and got angry, and I was taken aback.
I hadn’t meant to get so emotional.
“What do you mean, vain?”
“No, I mean—.”
“I must send humanity to Mars! I must!”
“Hmmm—.”
“We, the human race, are—.”
Musk then goes on to passionately explain, with fire in his eyes, why humanity must go to Mars and why he is bound to succeed.
This guy is serious about Mars.
He’s so passionate about it, I’m starting to feel a little bit of his enthusiasm.
“That’s amazing, Elon! I’m honestly impressed, and I take back what I said earlier, and I apologize to you.”
“It’s okay, you should have apologized, you’re not the only one who had this reaction. Anyway, this is why I’m holding on to my shares in Space X. It’s our mission to develop the technology necessary for humanity to live on Mars, and I don’t want Space X to be less likely to achieve that goal by going public.”
“Why would going public hinder Space X’s ability to fulfill its purpose? Couldn’t it increase its chances of success by attracting more capital?”
“No. Space X’s business is, as I said, ultra-long term, and a public company’s stock price is bound to fluctuate due to rapid changes in technology, internal events, or economic issues that have nothing to do with us.”
“That’s true.”
“And when that happens, will we, the people of Space X, be able to focus on our work? I hate that, and I want to eliminate any distraction from my dream.”
“I see.”
“That’s why Space X is very selective about the investments we take in. We only take in capital that we hope will join us in our dream for the long haul. We don’t need money for the here and now. That money can be invested in other public companies to make money.”
“I agree, Elon, and I’ll always support you.”
“Thanks, Alex.”
I sincerely supported this rocket man’s dream, and Elon must have sensed my sincerity, because he returned to his pleasant face.
“By the way, Elon. Space X costs a lot of money, doesn’t it? As I understand it, most of your income now comes from NASA, and you’re also putting some other countries’ satellites into orbit, but that income can’t cover everything, so you have to raise a little more every year to pay for it, right?”
“Honestly, yes. It’s a little hard to make a living putting satellites up for NASA and a few other countries. But with the success of the Falcon 9 rocket, it’s not hard to raise capital, so we should be able to make ends meet, and the Starlink business is cruising along, so we’ll have money coming in from there in a few years.”
“Starlink? You mean the one that’s going to cover the planet with internet satellites?”
“Yeah, we just launched 60 satellites at once last month, and that’s going to be our cash cow.”
“But don’t we have a lot of other competition, like Amazon’s Project Kiper, and OneApp and Airbus’ OneApp project?”
“Hmph! Alex, I’m number one in this new satellite internet business. They haven’t even launched a satellite yet, and I have. This kind of business is supposed to be won by the market leader, right?”
“hahahaha! That’s right!”
“That’s right! hahahahaha!”
The mood lightened again.
“So anyway, why are you bringing up Space X? Are you trying to get me to invest in it?”
“Actually, since you’ve been treating every non-Tesla business I’m involved in like crap, what do you think, Alex? If you share my dreams and give me voting control of your Tesla shares, I think we could make a decent deal.”
“Well, I’m sympathetic to your dreams, and frankly, I’m impressed, but giving up voting rights in exchange for an investment? That’s a little too low-ball for me, don’t you think?”
“Alex, I’ve told you before, not just anyone can invest in Space X. And with a market capitalization of what, $30 billion right now? In less than 10 years, Space X will be worth 50x, 100x its market value.”
“Hmm, so how much are you asking me to invest, and how much equity will you give me?”
“I’ll give you 5%. Take it for $3 billion.”
“What? You’re saying the market value is now $30 billion? I’m giving up my Tesla voting rights, and you want to pay me twice that?”
That’s not right.
And I don’t want a 5% stake.
“Alex, when you say $30 billion in market value, that’s what you’re saying, and do you really think that’s all Space X is worth? You could take it public right now and get several times that?”
“Well, that’s what you think, and besides, Tesla voting stock is that cheap, isn’t it?”
“Well, what do you think the price should be?”
“Hmmm—.”
I took a moment to organize my thoughts and opened my mouth.
“We should do this.”
“How?”
“Doesn’t it bother you that you have to raise money every year?”
“Of course it bothers me, doesn’t it?”
“Then let’s do this.”
“How?”
“I’ll pay you $5 billion a year for three years for $15 billion.”
“What? That much? You’re going to invest that much money, and how much equity do you want?”
“25%!”
“Dude, don’t talk nonsense!”
“You’d better listen to me to the end, because it’s never a bad thing for you, right?”
“…”
Musk glared at me, then opened his mouth.
“Go ahead.”
“In exchange, I’ll give you full voting rights in the Tesla shares I acquire, on the condition that you don’t do anything to infringe on my interests.”
“That’s it? Isn’t that the original deal?”
“Oh, and there’s more: I’ll give you full voting control of any Space X shares I acquire, with a few minor conditions.”
“What? Are you serious?”
“Yes, I’m serious, and don’t you think I should get a piece of the action? It’s a company that won’t go public for at least another decade, so it means I’m part of your dream.”
“Hmmm—.”
“Think about it. Whether it’s Tesla or Space X, I’ll have a stake in you, and you’ll have the security of not having to worry about money.”
“…”
Musk hesitated for a moment, then spoke again.
“Still, 25% is too cheap, let’s make it 15%!”
“Were you a robber in a past life, you mugger? That’s not fair! 23%!”
“18%!”
“21%!”
“19%!”
“20% done!”
“Okay! Deal!”
“hahahahaha!”
“hahahahaha!”
I shook Musk’s hand vigorously.
And just like that, I had an unexpected stake in Space X.