SpaceX went public this week the largest IPO everCEO Elon Musk is the world’s first trillionaire.
Despite its name, SpaceX emphasizes its potential its expensive AI workand competitors OpenAI and anthropic they may soon follow with their own public market debuts. So in the latest release TechCrunch’s Equity podcastKirsten Korosec, Sean O’Kane and I discussed what looks to be a hot IPO summer.
“We have SpaceX, which is not only soaking up a large amount of money available in the public markets, but also testing the limits of what a public company can be and how much it can be controlled by one person,” Sean said. “My eye is really on these other tech companies who are going to go public and how much they’re trying to emulate.”
Kirsten also noted that after SpaceX helped popularize the concept, there are other startups trying to “ride that SpaceX IPO wave” by raising money for orbital data centers.
“So there’s a ripple effect throughout the market that I think is probably more interesting than just the headline ‘SpaceX makes Elon a trillionaire,'” he said.
Read on for a preview of our conversation, edited for length and clarity.
Anthony Ha: I just want to digress a bit from the SpaceX IPO, because outside of all of this Elon Musk, it’s the start of a (series of) different IPOs for different AI companies. We talked about Anthropic going public in private, and now OpenAI has done the same. How excited are you both about it?
Kirsten Korosec: I want to start off by saying that I really like Julie Bort’s story, which I think sums it up pretty well. It’s a great title, so I’ll read it here: “It’s not FAANG anymore, it’s MANGOS.” FAANG, Facebook which is now Meta; Amazon; apples; Netflix; Google, now Alphabet.
Now it has changed and we have Meta, Anthropic, NVIDIA, Google, OpenAI, SpaceX. (We still have) giant tech companies, sure, but there’s a change here, right? First of all, we have a bunch of AI labs there, and it’s very different. Netflix is downloaded from there, a huge streaming service. So, for me, it’s an interesting shift in terms of the public markets and the large amount of money and capital available in the public markets, moving away from consumer (and) social networks, especially towards AI labs and other, more innovative deep technology like SpaceX.
I think that’s the most exciting thing—besides, it’s going to keep us all very busy as reporters this summer, probably more than any other summer in a while.
Sean O’Kane: You know, I wanted to be a lawyer once, and one of the reasons I didn’t was because I hated the paperwork that would be involved. And here I am looking forward to reading hundreds more pages of SEC filings this summer – talk about a beach read.
A moment we have been waiting for a while. We’ve spent the last few years wondering if the IPO market is really going to get quoted after so much confusion about private markets and the derision that people are reaching their similar series (whatever) fundraising round. It’s a good stress test—I mean “good,” take that word for what you want—a good stress test for the public markets in general.
We have SpaceX, which is not only soaking up a large amount of money available in the public markets, but also testing the limits of what a public company can be and how much it can be controlled by one person. I have my eye on these other tech companies that will really go public and try to emulate.
What I keep saying and thinking with SpaceX is that they’re really trying to take some of the most extreme aspects of the original IPOs of Google and Meta in the early 2000s and mix it with Amazon and “We’re going to lose money forever.” I wonder how much Anthropic and OpenAI will try to do the same. Will they reinvent themselves in the image of SpaceX? Or will they try to put themselves in a different light?
Anthony: One thing that really drove home when I read about the OpenAI IPO is that some of it is a bit of a race in terms of timing. I think it’s safe to say at this point that SpaceX is first out of the gate, probably with some advantages and disadvantages. It’s also a slightly different company because it bills itself as an AI company, but it’s obviously a lot of other things too.
But there’s a sense, at least according to some analysts, that both OpenAI and Anthropic might want to go before the other because there’s only a limited amount of capital, a limited amount of interest. At some point, some of these valuations should start coming back down to Earth, and so both could compete for first place.
Kirsten: I mean, there’s a huge race between Anthropic and OpenAI. You even see OpenAI talking about lowering prices, and they will certainly be competing on the IPO calendar. But this is very short-term thinking. If they’re smart, they should be more concerned about the long-term game here.
What’s really interesting to me is that while Anthropic, OpenAI, and SpaceX are gearing up for these moments, there are a number of other companies raising money or entering into SPACs for the success of companies like SpaceX. For example, a company called today or while we were recording this Quantum Space is a SPAC and totally trying to ride the SpaceX IPO wave.
We have many other startups that our reporter Tim Ferholz has revealed – they won’t be made public, right? But if SpaceX is successful with space data centers, they’re cashing in on that potential and building a business on that potential. So there’s a ripple effect that’s happening throughout the market that I think is more interesting than just the headline,”“SpaceX makes Ilon a trillionaire.”
Sean: The generally accepted theory in Silicon Valley is that AI is remaking the economy, but because of it use it. AI actually already restructuring the economy – according to how people try to build it. We have everything you just described, we have other companies rushing to the public markets. I think that’s a really good point to think about: Will they regret rushing into the public markets?
But we even have companies like Ford and General Motors that are turning their unused battery generation capabilities into power providers for data centers. And Ford’s stock soared when it honestly revealed what it was a rather modest-looking energy storage caseCompared to something like a Tesla. And there was a really great series of stories this week about Tim De Chant GM’s pivotalso.
The economy is already being rebuilt. Whether this is sustainable is again a question, but it is happening now.
Kirsten: That’s a really good point because I think, I mean, five, six, seven, eight years ago, there were all these headlines of the next Tesla killer, and these automakers and other companies are still trying to recreate all these different businesses, especially Elon Musk-based business strategies. They haven’t learned their lesson.
I wish I could get this out to all the automakers out there: I understand that you have a lot of unused batteries and you want to move on to something else, but if you try to model your business after Tesla or SpaceX and others, it doesn’t always work. Maybe look elsewhere.
Sean: So Ford shouldn’t go into space data centers. Is that what you said?
Kirsten: No, they shouldn’t. But just look. It will happen.
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