SpaceX files to go public, and the math requires a little faith | Equity Podcast

Elon Musk and the OpenAI Trial

• Elon Musk lost the Open AI trial, but he is trying to declare a moral victory, partly because he lost on a technicality, which is the statute of limitations, 10s
• The jury deliberations took only two hours to decide that the damage Musk may have suffered happened too long ago and he waited too long to file the lawsuit, 10s
• Musk's lawyers knew about the statute of limitations but still went ahead with the trial, and now they are planning to appeal the decision, 2m6s
• OpenAI's reputation has been damaged significantly by the trial, despite winning the legal case, and it can be argued that everyone is a loser in this situation, 2m6s

OpenAI's IPO Plans and Trial Aftermath

• OpenAI is confident about its future and is planning to file for an initial public offering (IPO) confidentially within a matter of days or weeks, 2m6s
• The show will also discuss other topics, including the company behind NanoClaw, an anthropic acquisition, the tension between consumers and tech companies embracing AI, and the SpaceX IPO, 2m6s

Introduction to NanoClaw and Its Funding

• Nano Co, the company behind NanoClaw, raised $12 million in seed funding and rejected a $20 million buyout offer, positioning itself as a secure alternative to OpenClaw, 2m6s
• The company in question has gained tremendous interest very quickly, with its seed round taking less than two months to secure, and it is notable for being a family startup story 10s.
• The company received $20 million in funding, which seems like a relatively low amount for an AI startup, and it is wondered if this amount is due to the founders being cautious and not wanting to dilute their equity 42s.
• The funding was led by Valley Capital Partners, and the Hugging Face CEO was an angel investor who reached out to the founders via social media to express interest in their product 2m6s.

NanoClaw's Product and Business Strategy

• The product, Nano Claw, operates in a container to prevent it from accessing and potentially harming other files on the computer, which is seen as a sign of caution but also potentially a limitation of the product 4m6s.
• The company's approach to building their business and product is seen as cautious, with a focus on doing things the right way, and their website indicates that they are not targeting a general consumer audience 6m10s.
• The $20 million funding amount is considered low compared to other AI startups, and it is speculated that if the funding had come from a larger company like Meta or Open AI, the amount would have been higher 2m6s.
• The company needs to figure out who their target customers are and how to build their product, as well as show caution around the more extreme tendencies of OpenClaw, a technology that can do remarkable things without being fully understood 10s.

Andre Karpathy's Influence and NanoClaw's Momentum

• Andre Karpathy, an OpenAI co-founder, was a vocal supporter of the startup Nano Claw, and his endorsement likely brought attention and investment to the company, but he has since moved to Anthropic, which is a significant development 2m6s.
• The story of Nano Claw's founders reacting to Andre Karpathy's tweets about their company gives a vivid idea of the startup scene, where companies can gain momentum and grow rapidly, even if they are still in the early stages of development and operating from a "couch startup" environment 2m6s.

Anthropic's Acquisition of Stainless

• Anthropic has acquired a startup called Stainless, which created a tool to automate software development kits (SDKs) for APIs, a technology that is important for AI labs creating AI agents, and this acquisition is seen as a smart move to fill a need in the market 4m30s.
• The acquisition of Stainless by Anthropic is reportedly worth around $300 million, and it is seen as a strategic move to acquire a product that can automate tasks for AI labs, rather than allowing it to become a monopoly problem 6m40s.
• Anthropic is throwing money at various projects, including one where it's acquiring a company and using its technology for its own SDKs, while not making it available to competitors, indicating a strategic move to gain an advantage 10s.

Anthropic's Strategic Moves and Andre Carpathy's Hiring

• The company has been using the acquired technology since the beginning, showing its value, and has also hired high-profile AI expert Andre Carpathy, a co-founder of OpenAI, who had previously worked at Tesla and was starting his own company, Eureka Labs 42s.
• The hiring of Andre Carpathy is a significant move for Anthropic, and the cost of bringing him on board is likely to be a large amount, although the exact figure is not known 2m6s.
• Anthropic's moves are seen as a challenge to OpenAI, which was previously the leading company in the AI space, and Anthropic is now breathing down its neck or ahead in some categories, with a potentially sustainable business model 2m6s.
• Unlike OpenAI, Anthropic is taking a more focused approach, avoiding large capital expenditures and partnerships, and instead concentrating on its core business, which may have been a factor in Andre Carpathy's decision to join the company 2m6s.

Public Sentiment and Backlash Against AI

• There is a notable shift in public perception, particularly among younger generations, who are pushing back against tech companies, including those developing AI products, with some commencement speeches being interrupted by booing when AI was mentioned, indicating a growing dissatisfaction with the tech industry's approach to AI 10s.
• The Google I/O developer conference announced significant changes to Google search, putting AI front and center, and replacing the traditional 10 blue links with a new format, which may face pushback from users, but the company seems committed to making this change work 2m6s.
• The decision to alter Google search has been a long time coming, and despite potential backlash, the company is likely to proceed with its plans, possibly making some tweaks, but ultimately prioritizing its AI-driven approach over traditional search results 4m30s.
• The shift towards AI-driven search results may have significant implications for the open web, as it could lead to a decline in the creation of new information, which is essential for AI to function effectively, and this could ultimately be detrimental to the tech industry as a whole 6m20s.
• Some individuals are already opting out of using Google search due to the increased presence of AI-generated content, and are instead using alternative search engines, highlighting the potential risks of alienating users with this new approach 8m40s.
• The tech industry's approach to AI is seen as shortsighted, as it prioritizes convenience and audience capture over the long-term implications of relying on AI-generated content, and this could have far-reaching consequences for the way people access and interact with information online 10m50s.

Google's AI-Driven Search and Market Implications

• The discussion revolves around the potential disruption of Google's business model by AI-powered search, and how this could impact publishers who currently work with Google, as they may not want to be indexed if they do not receive any traffic or value in return 10s.
• The development of AI-powered conversational search is not limited to Google, but is also being implemented on YouTube, and other smaller startups such as Exa Labs and Parallel are raising money to bring AI search to consumers, making them potential acquisition targets 2m6s.
• The advancements in AI have made it possible for companies to compete with Google search, which has dominated the market for decades, and there is hope that new competitors will emerge to challenge Google's position 4m42s.
• The idea of a new search engine that lets people access the internet, rather than just providing a singular funnel for answers, is seen as a great business idea that someone should build, as it would promote competition and provide an alternative to Google's current model 6m15s.

Potential SpaceX IPO and Financial Overview

• The conversation shifts to the topic of a potential SpaceX IPO, which was not considered a possibility in the past due to Elon Musk's dislike of public companies, but has become a more viable option in recent months, particularly with the announcement of orbital data centers and the potential merger of Musk's other companies 10m10s.
• SpaceX has filed to go public and claims to have a total addressable market of $28 trillion, with $22 trillion of that coming from enterprise applications, specifically enterprise AI, which seems like a highly ambitious and unrealistic goal 10s.
• The company's filing also mentions human augmentation using AI to enhance human capabilities, which is a concept that seems quite far-fetched and lacks concrete details 2m6s.
• SpaceX is often perceived as a rocket launch company, but its capital expenditures reveal that it is investing heavily in other areas, including $3.8 billion in space, $4.1 billion in connectivity for Starlink, and $12.7 billion in AI, which is burning through enormous amounts of cash 4m30s.

SpaceX's Financial Challenges and Revenue Streams

• The AI segment, which includes the X AI merger, is losing significant amounts of money, but the company has found ways to generate revenue, such as the deal with Enthropic, which pays $1.2 billion per month to access compute at the Colossus One facility in Memphis 6m20s.
• SpaceX's financial situation is complex, with $30 billion in debt, and while the company was profitable in 2024, it lost billions of dollars in 2025, largely due to higher expenditures, particularly in the AI business 8m10s.
• SpaceX is looking to raise funds at a $1.75 trillion valuation, which some consider overvalued due to the company's high total addressable market (TAM) that is not tied to real numbers, and the fact that their cost of revenue is increasing along with their revenue 10s.

Corporate Structure and Control at SpaceX

• The company's Starlink business is growing, but the cost of revenue is also going up, and their Space Launch business is not growing quickly, with increasing costs, which are important factors to consider when evaluating the valuation 2m6s.
• Elon Musk is expected to maintain significant control over SpaceX after the initial public offering (IPO), with more than 50% of the voting control, allowing him to name board members and make key decisions, making it a highly controlled company 4m30s.
• The company's corporate structure, including its move to Texas, will make it difficult for shareholders to bring derivative suits against SpaceX, unless they own at least 3% of the company, which would be a $52 billion position at the current valuation 6m15s.

Valuation and Investor Considerations for SpaceX

• The valuation of SpaceX requires a certain level of faith in the company's future prospects, including its potential to become a key player in a multplanetary civilization, and investors who disagree with the valuation may not have many options to act on their disagreement 9m20s.
• The discussion around SpaceX's valuation highlights the paradox of evaluating the company's impressive accomplishments and real business results against the need for "fantasy math" and speculation to justify the high valuation 10m40s.
• The numbers targeted by SpaceX for its initial public offering (IPO) are slightly higher than those of other major companies, suggesting an attempt to make it the biggest IPO ever, with the goal of making a significant impact from the start 10s.
• The prospectus for SpaceX's IPO does not mention the biological viability of a multplanetary civilization, which is a significant risk factor that should be considered by prospective investors, as the biological limits of human space flight are a real concern 42s.
• Elon Musk has shown a tendency to overlook the biological limits of human space flight throughout his career, despite evidence from repeated flights to the International Space Station (ISS) that highlights the risks and challenges associated with space travel, which go beyond just radiation risks 2m6s.