FULL TRANSCRIPT

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Speaker 2 (00:00)

Thank you everybody for joining. Today we are covering SpaceX. I am super excited for today's conversation. This is actually brought back to you by popular demand since we've already covered it. So my name is Slava Rubin. I'm one of the founders here at Vincent. We are your platform to democratize access to all things alternative investments. We do this pre-IPO series. We have our smart humans podcast. We do various webinars. And obviously you just signed up for the alternative investment report.

We also have Jan-Erik, founder of Sacra one of the brains behind the operation doing all things pre-IPO. They do incredible research covering all these pre-IPO companies as they're scaling all the way up to their IPO. Jan-Erik, thank you for joining.

Speaker 1 (00:42)

Thank you for having me. Great to be here again.

Speaker 2 (00:45)

All right, let's go to the next slide. So first a word from our compliance department. So nothing in this presentation should be construed as an offer to sell securities or a solicitation of an offer to buy securities. All investments involve risk and possibility of loss, including loss of principle and neither past performance nor forward looking information is a guarantee of future results. So I'm gonna hand it off here in a second to Jan-Erik.

Just as a reminder as to how we like to do this, there is a Q &A button at the bottom. So feel free to add any questions that you have along the way. I will look to moderate that and try to add your questions whenever possible and whenever relevant. So feel free to start adding questions whenever you'd like. With that said, Jan-Erik, why don't you start telling us about SpaceX?

Speaker 1 (01:31)

Awesome. Yes, SpaceX today is one of the biggest private companies by valuation in the world. They are one of the most sought after companies in terms of private stock, one of the companies that people are most interested in learning more about. And yeah, they've been around for quite a while. Founded shortly after Elon Musk sold PayPal. Thought, what could I shovel my profits here into?

going to Mars, obviously, is the answer. And when SpaceX was founded around 2002, the space industry and going to space was dominated by Boeing, Lockheed Martin, the United Launch Alliance, and charging 200 million plus per launch, which meant that NASA didn't launch rockets very often. And over the last two decades, the launch landscape, going to space, NASA's operations have been

completely transformed in large part due to SpaceX, their approach of, you know, kind of vertical integration, rethinking how to build rockets from first principles. You know, we went from launching rockets every 30 days or more to now a world where, you know, when we last talked about SpaceX earlier this year, they were launching every three days. They've gotten that down to like every 2.2 days or something like that.

⁓ you know, launches that cost a fraction of what they used to cost. But all this is kind of about infrastructure, you know, the foundational launch business of SpaceX. And that doesn't really generate the revenue anymore. So the real kind of moneymaker of the business now is Starlink, which is a satellite internet business, satellite connectivity business, which they have, you know, bootstrapped, you know, these satellites into space.

being able to ride them on SpaceX rockets. They now have a ton of subscribers into the eight, nine million range and it generates the majority of SpaceX revenue. Elon Musk just said it's expected to generate as much revenue as NASA has budget next year. So SpaceX as a launch business is kind of like the foundation and Starlink is one of potentially many sort of cash generating businesses built on top of that.

Speaker 2 (03:31)

Awesome. So we already have a question and it's a great reminder. So in regards to getting access to SpaceX shares, we here at Vincent actually through a partner are able to secure access. Now access to SpaceX is always difficult and can move very quickly. We're actually going to put up a link in the chat. So if anybody is interested in actual SpaceX shares at a ⁓ lower minimum, probably about 20K minimum.

They should sign up with the form and provide their information ASAP and our team will follow up after this webinar with more specifics about the partner, the deal, and then how to proceed forward. So timely question. All right, Jan-Erik, revenues.

Speaker 1 (04:15)

Great, yeah. So SpaceX, one of the biggest companies in the private market, it's also one of the biggest by revenue. So, you know, can sort of see the early years of SpaceX for sort of lumpy, you know, flat growth at times, you know, growth going backwards. And a lot of that is because of what I just said, but the launch business, you know, the launch business is kind of dependent on demand for launches and the wider market around space. And so you really start to see revenues take off with

Starlink coming into being. Elon tweeted this 15.5 billion is what they're projecting for 2025. And then for next year, they're projecting that roughly 18 billion for the entire commercial business of SpaceX. that plus then the launch business puts them probably above 20, 20 billion for 2026.

Yeah, 14, you know, for 2024, I think the range is maybe a 13 to 14 billion. As that's an estimate right now that we've made. But the rest of the numbers here are pretty high confidence. And yeah, the main sort of observation here is that Starlink is roughly 60 % of revenue as of 2024. And it's expected by the end of this year when the, you know, when the company makes announcements, makes filings about the revenue, it's expected that Starlink will be about 70%.

of all revenue for the year. definitely becoming a very large portion of their income.

Speaker 2 (05:41)

question on this. So one of the other obvious takeaways here is the yellow growth is coming down. So just to pull that apart, it sounds like the starling growth is growing pretty dramatically, but the infrastructure growth is growing much slower. aggregate for 25 or even 24, you know, the number, well, sorry, really 25, the aggregate growth is much lower.

What do you think about that declining chart? you said something like maybe 20 billion for 26. So we will come back up. What do you think of the growth?

Speaker 1 (06:18)

Yeah, think that there's, well, there's a bit of maturing base with Starlink and a bit of, to some degree, think saturating the sort of market for, know, Starlink has primarily to this point been positioned as, you know, rural, for rural areas, for people who are sort of, you know, nomading around an RV, but also need high speed internet access for places where

existing broadband does not touch at all. while I think that's a market that they still have growth potential in, I think that it's not as big a market as potentially having Starlink compete head to head with major carriers like Verizon, AT &T in America, Telstra elsewhere, other global carriers, which is ⁓ part of the future vision for Starlink and definitely a driver of some of those ⁓

projections and then yet launch revenue, like you pointed out, is not growing as fast. And a lot of that is because, you know, the launch business relies or requires demand from other companies that are not just SpaceX to go into space. And they are doing stuff on that on that side, too, that we'll talk about with with Starship. But for now, they're sort of reliant on on capacity and operational constraints sort of get in the way.

Speaker 2 (07:33)

Got it. Okay, you can continue.

Speaker 1 (07:35)

Yeah, and then, you know, obviously in terms of fundraising, they've been one of the most prolific fundraisers as it's a very capital intensive business to run rockets into space. Most recently, they did a tender offer at a $400 billion valuation. So more valuable than Boeing and Lockheed Martin now combined to the former two companies in the United Launch Alliance.

They do these tenders regularly and allowing employees and early investors in the company to sell, some liquidity. Each tender that they've done, which they happen a few times a year, has been done at a higher valuation than previously. Their CFO has talked about intentionally suppressing the price and the tenders below what they could have gotten, given demand, just to sort of keep.

keep the price, keep it moderating, ⁓ not going up too high. But yeah, they've been up to 400 this summer from 350, which is where they were at the beginning of the year when we last covered SpaceX. yeah, right now, taking that $15 billion number that Elon tweeted, so slightly future looking multiple, but at 400, that gives them about a 26x multiple, which we'll talk about where that sort of slots in versus other.

space companies, other defense companies and that sort of thing.

Speaker 2 (08:51)

Yeah, I this is a great chart here to think about that. Like ⁓ if SpaceX was public right now, which obviously would be a completely different dynamic if everybody and their mother was able to invest via Robinhood, et cetera. But how do you think about this chart that you posted here in terms of the, you know, the revenue multiple or the revenue growth multiple or percentage and how it compares? So how do you think about that?

Speaker 1 (09:19)

Yeah, it's funny because often when companies go public, the multiple comes down because so much of it is driven by this scarcity dynamic and yeah, people not being able to access the stock. I think that would, given the inflated multiple above a lot of other companies, I think that could be the case with SpaceX, but probably not. would think ⁓ just because if you look at like Tesla, for example, it doesn't seem to obey the same.

kind of, you know, physics of evaluation that other car companies do or other battery companies do for that matter. And a lot of that is, you know, about growth. A lot of that is about kind of ⁓ moonshot visions and the Elon effect, which I think would all be very much at play with SpaceX, maybe more so because of the, you know, more kind of, you know, kind of more ambitious, more

bigger vision aspects of SpaceX as a company. I mean, this is my personal feeling, but I think they could probably maintain that multiple, if not expand it in the public markets, given what's been discussed about intentionally suppressing the valuation over time. So yeah, I see it as it makes sense in the same way that Tesla's valuation makes sense and so on. So yeah.

Speaker 2 (10:36)

Nice. That was basically you saying you don't know if Tesla's valuation makes sense. So that's interesting. So if SpaceX was public today, obviously this is not financial advice. This is rather just us having opinions. What is your guess? The valuation is today. SpaceX is trading on Robin Hood, you know, at 1 p.m. What's going to happen?

Speaker 1 (10:55)

Yeah, I think if it went, you know, it got on Robinhood at 400 billion, I think it would, it would fly straight up because there is so much demand. mean, SpaceX at Sacra, we don't, we don't do, you know, placements of private stock or help people buy private stock. And we still get emails all the time about SpaceX. People wanted to get access to it, you know, who are just asking anyone they can find. So I definitely think it would, it would shoot up on the first day. I don't know, 600, 700 billion. I don't know. And then, and then probably,

find a sort of happy medium at some point. But I would think that it would shoot up just based on what I've seen from folks as far as demand.

Speaker 2 (11:34)

You mentioned the tenders and I think this is an important one for people to know SpaceX is one of those companies that is so large and so quote unquote liquid even though it's a private company that they actually I don't know if this is officially a rule. They're pretty much on schedule during two tenders a year where pretty much every six months they're doing a tender which is not the equivalent of being on the NASDAQ obviously but it does create an interesting liquidity opportunity to buy and sell.

for all these various players. So I just wanted to bring that up. Any thoughts on that?

Speaker 1 (12:05)

That's exactly right. there, you know, as we at Sacra, we look at the private markets, they're one of the sort of pioneers of this. And that was in large part because they had so many employees, so many early investors who had spent a lot of their time or money with SpaceX from very, very early from 2002. And a lot of those people needed liquidity, but there was also a ton of people that wanted in to the company. And so, yeah, being able to run those on a bi-yearly basis for so long is definitely another proof point of demand.

⁓ Also of Elon's dedication to remaining a private company and not going public.

Speaker 2 (12:40)

Great, so I'm getting a lot of questions about the deal specifically. I'm just gonna pause here for a second, which is on this conversation with Jan-Erik we're not gonna discuss any of the terms of the specific deal available or how you can find a good or bad deal for SpaceX. We actually have separate pre-IPO conversations where we cover exactly that, cover the entire glossary of terms.

and things you should ask and learn about about getting into any pre IPO deals. So feel free to cover or review any of those podcasts. So we're not going to cover any of that specifically as it relates to SpaceX. So we're going to move on. So in regards to product, you've mentioned now that there's really two sides of the company. There's really the, let's call it the spaceship launching part of the business. And then there's Starlink, which for simplicity sake is a telecom business.

So can you start with the Starlink side of the business? Give us perspective as to what that really means. And then we could go to the rocket ship side.

Speaker 1 (13:43)

Of course. So Starlink was started, you know, there's a bunch of these satellite internet companies that you know well, if you've taken a domestic or international flight and paid, you know, $20 for the privilege of getting dial-up internet speed while you're in the sky. And a lot of them, you know, are very slow, you know, in large part because they're using satellites that are extremely far above the earth. And there's very few of them.

you know, which is typically the case because they do not have a dedicated, you know, launch services arm of the business. However, SpaceX obviously is sending rockets into space every two or three days. And so what they did is, is set up a regular cadence of launches dedicated to getting these satellites into low earth orbit, which is a area that most satellite internet companies have not explored, have not had the capability to do so.

but low earth orbit satellites essentially allow them to deliver these 20 millisecond, 40 millisecond ping and 100 megabits per second internet connections ⁓ anywhere on earth, you know, roughly within the range of starlight satellites, which doesn't cover the entire earth. There's some geographical conflicts there, but most of the earth ⁓ they can offer, you know,

YouTube, Spotify, we're the FaceTime, we're the internet connections, basically anywhere. So that ⁓ has been a big part of the business because obviously there's a lot of kind of businesses and also resident ⁓ consumers that want to pay for this from rural people who don't get good internet access where they are, to airlines who want to be able to offer better wifi in the sky, which ⁓ just a few days ago, I think I saw the

on TV ⁓ news was the first United Airlines plane was going aloft with Starlink. So that was a really big deal that they signed earlier this year and is now live. And then there's a bunch of other stuff we'll talk about with Starlink around direct to cell mobile, cellular, texting, T-Mobile, that kind of thing. But that's the sort of long and short of it.

Speaker 2 (15:43)

Let's go back to the Starlink slide. So my understanding since we last covered SpaceX, Elon and SpaceX actually bought a major play of spectrum, like $17 billion, I think they paid for it. Can you just give a little bit of color on what that means and what is that exactly the play there? So that's happened in this year.

Speaker 1 (16:01)

Yeah, it was a few weeks ago. And definitely big. They paid 17 billion, in cash, half in stock to this telecom EchoStar, which was in possession of these two sort of slices of spectrum and wasn't using them. And SpaceX had to actually sue in order to make the deal happen because EchoStar wasn't using the spectrum, but didn't really want to sell. And so by acquiring this spectrum, what SpaceX basically

has been able to do now is they gain a tenfold jump in how much spectrum they can use, which allows them to deliver continuous, higher bandwidth connections to more people and in more areas of more congestion. So before, they were really using T-Mobile spectrum. If people remember, this deal was highly publicized for the last few years where Starlink would work with T-Mobile and then...

if you had T-Mobile and you went into a canyon with no cell service, you could get Starlink texting. That was a very minimal use of Spectrum. With this Spectrum that they've purchased for 17 billion, they can really expand that into not just texting, but voice and video. And so it dramatically expands kind of what Starlink can offer. It also sets up really this ⁓ kind of future where, or it indicates that the future that SpaceX wants is one where

They are offering more of this on their own without working with partners necessarily and positioning kind of as a global first telecom that can operate anywhere and give you everything AT &T or T-Mobile can.

Speaker 2 (17:33)

So... ⁓

What's the projected timing on that? I mean, no one knows exactly. We're just having a conversation. But are we gonna have Starlink sell plans on January 1st, 2026? Are we gonna have Starlink sell plans on January 1st, 2030? Do you have any perspective on that?

Speaker 1 (17:53)

Yeah, I think 2030 is closer. I think what we'll see, we already have T-Mobile working with Starlink. I think that we'll see more T-Mobile partnership. I think we may also see AT &T and Verizon partnering with Starlink because everybody wants to be able to offer connectivity anywhere, even when you're in a dead zone. And so that's why T-Mobile partnered with Starlink. And that's why we would expect AT &T and Verizon to potentially do so, although there are a few other players in the space.

I think that in the long term, we will see Starlink offer their own direct to cell plans, but there's two issues. One is sort of ⁓ getting more spectrum because right now the amount that they have is not necessarily going to be able to deliver direct to cell connectivity to someone in the middle of New York City. It's too many people, too many other phones, and they need more spectrum to do that. The other part of it is that actually the phones, this generation of phones,

is not equipped, the chipset is not equipped to hook up to the spectrum that SpaceX bought. So there needs to be another generation of phones as well. And so it'll be definitely a few more years.

Speaker 2 (18:57)

Okay, great. Should we move on to the rocket ship side of the business?

Speaker 1 (19:03)

That sounds great.

Yeah, so from the start, SpaceX has been all about transforming the economics of getting into space through vertical integration. So building more stuff themselves versus, you know, kind of these relationships with many different subcontractors that have inflated the cost of, you know, everything in aerospace and defense, plus using more off the shelf components. So where possible,

trying to find the cheaper option for supplies and also just kind of a multi-year relentless drive to lower the cost of getting this space. so Falcon 1 brought down the costs significantly, Falcon 9 brought it down more, Falcon Heavy brought it down some more. But the real kind of economic inflection point that is anticipated now is Starship. ⁓

which is sort of the next level up in terms of both size and reusability. So we know that SpaceX has this reusable, the innovation around reusability with the Falcon rockets. The problem with it is that you still need to the, I believe it's the second stage of the rocket. With Starship, there's no replace, so it's fully reusable.

You send the rocket up, you bring it down and you can just launch it again a day later. You have 150 ton payload capacity and the sort of, you know, the moonshot of it all is basically that you reduce the cost by hundreds on the existing Falcon line. And so this makes possible a lot of potential businesses in space. Plus it makes possible far more...

rapid cadence of launch and bigger launches. So Starship, this is kind of the next level of what SpaceX is doing in terms of launch services. And 2025 was a big year for some of this testing. So we actually had a few failed tests earlier in the year where the Starship was lost early explosions or re-entry breakup. And then in August and October, we had quite a few, we had two successful tests.

in which there was the correct stage separation, payloads being deployed, controlled landing. So there was progress made on Starship that is encouraging.

Speaker 2 (21:17)

Yeah, what's interesting about the infrastructure business is if you simplify it down, it's basically if you believe in space, this is the highway to space, right? This is the trucking business to space. This is the way to get to space. All these different companies are building stuff that are trying to accomplish things in space. And a lot of them need to figure out how to get to space, literally. And a lot of them are using SpaceX ⁓ for that benefit. So really.

If you believe in this business, need to believe that space is an important frontier where there's gonna be a lot of commercial activity. If you don't believe that, then it's easy to be pessimistic on this business. Because there's definitely now multiple other pre-IPO businesses that in this year, more recently, are now unicorn companies on their own as space companies. And a lot of them are sitting on top of SpaceX for...

the transportation, et cetera, et cetera. Do you have any comments on that, Jan-Erik? Or any thoughts?

Speaker 1 (22:16)

Yeah, two things. One, think is I agree completely that a lot of this depends on do you believe space is a valuable place to bring businesses? I think Starlink being a sort of cash cow for SpaceX is really great. But the really big picture vision is that Starship enables manufacturing in space, space tourism, more space stations.

Those are all kind of potential markets. think space manufacturing is very interesting. This could be hard to sort of wrap your head around a lot of this stuff when a lot of it is so early and in demo stage, but I agree. And then I think on the other hand, all these other companies, one interesting dynamic that we've sort of watched in the space is, know, lot of the time, like SpaceX inspired a whole wave of companies trying to get to space.

Relativity, Relativity Space, Axiom Space. You have a bunch of these companies that got started up doing very similar things to SpaceX and in many cases using SpaceX to get to space. But in terms of success and sort of profile and launches, really we've kind of been left with SpaceX being the one dominant company and a lot of the other ones having problems.

⁓ in terms of staying alive. And so it's one where there hasn't been a whole generation of successful startups seeded by SpaceX. It's one where a bunch of startups were created to also try to get into space and SpaceX has kind of remained the monopoly power in the space.

Speaker 2 (23:43)

Yeah, let's transition to competition and how you think about the market. You did mention that there's other types of players. Before that, I just want to answer one of the questions that came up. It was a little bit more related to Starlink, but in general, someone asked, so if I invested in SpaceX and they spin off, let's say Starlink or there's an IPO or they sell, how would that work as a liquidity event for existing investors? So I wouldn't be able to answer specifically related to any specific deal that anyone is in. But generically, when people ask related to

Starlink, if you invest, it already is included. So let's say one day Starlink does spin off, you will get shares both of SpaceX and of Starlink. So right now you're getting, let's call it both products, both companies, even though they're one company, all in one investment. Okay, let's move on, talk competition. Thank you.

Speaker 1 (24:35)

Great. I SpaceX in many ways kind of stands alone being such a giant private company with such a high valuation, but, you know, 26X, roughly the multiple, if we take their end of year revenue and the tender round, you know, when you look at who the key comps are here, you know, in the public markets, there's very few kind of rocket companies. One is Rocket Lab, which specializes in kind of

smaller medium lift launch ⁓ and space systems. So they are roughly 500 million in revenue and valued at about 60 X that. And it kind of fits a trend that you see across some of the more emerging sectors in the public markets where companies are kind of very small in terms of revenue value very highly. Similarly, AST Space Mobile, which is a

competitor on satellite internet that folks are, a lot of folks are excited about, you know, has very tiny revenues and is valued at around 30 billion. I think so, yeah, very large, you know, five, 6,000 X revenue. And then you also have comps on the other end of the spectrum, Boeing, Lockheed Martin, Northrop Grumman, you know, these kinds of companies are in the,

100 billion to 150 billion market cap. They make around 70 billion a year. So they're in that kind of two to three X revenue multiple phase. so yeah, speaks to the challenge of kind of pumping them on multiple, cause know, SpaceX, SpaceX is valued more like a kind of SaaS company, know, high growth, a high growth, high margin SaaS company than anything else. But

Yeah, we can sort of talk a little bit too about some of these private competitors. ⁓ Blue Origin probably is the number two behind SpaceX, although a distant number two started by Jeff Bezos. They also have a Starlink competitor that they're incubating. And then I think, you know, a lot of the competitors here too are these sovereign companies in China and in France and elsewhere. But yeah, SpaceX in the United States.

more or less stands alone. They've become the majority of NASA launches. know, everyone uses SpaceX rockets to get their stuff into space, more or less even, you know, competitors with SpaceX. So yeah, there's very limited alternatives at the moment if you're in the United States.

Speaker 2 (26:49)

Awesome, let's go to Tam next and discuss really what the market opportunity is. Before we do that, we've actually had quite a few people join since this all has started. So I wanna put a couple of reminders out there. Number one, we have the Q &A, so anybody can ask any questions that they want. I'll look to review those and try to incorporate ⁓ answers or into the conversation. Number two, with SpaceX here, we have a really unique opportunity. So we have Vincent have partnered with some other providers.

to have direct access into SpaceX via these partners. So if anybody is interested to invest into SpaceX, they should fill out the type form, which is in the chat that was just sent, and they should fill it out ASAP, because some of this availability goes very rapidly, given the low minimums and some pretty aggressive pricing. So if you want to fill that out, our team will follow up accordingly. And then if you have any questions right now,

or as this conversation goes on, please put them in the Q &A section. All right, let's talk to him, Jan-Erik.

Speaker 1 (27:50)

Yeah, definitely. It kind of goes to what we've been talking about, but there's a lot of different kinds of potential businesses that you can imagine being built in space, which SpaceX would be critical to unlocking access to because they have the cheapest launch economics. They have the most launch capability of any really company in the world. And so if you want to build space manufacturing, like the startup Varda,

because there are certain types of semiconductors and pharmaceuticals that are much cheaper and easier to manufacture when you have a zero gravity environment. SpaceX would be kind of like if you're building some kind of oil, if you're building standard oil in the 19th century, you're relying on the railroads to get your product from the well.

market, SpaceX becomes kind of the central railroad of getting into space, whether it's for this manufacturing kind of use case, whether it's for launching space stations like the ISS and others, whether it's for space tourism. There's a few that we have done more research on since we made this diagram. Some interesting ones like, for example, point-to-point travel on Earth is sort of unconventional one, but

if you just imagine this diagram that instead of leaving Earth's orbit and going into space, you would have a SpaceX airport, let's say, near JFK in New York, and you could get on a rocket. It would go up, it would circle the Earth very quickly, and then it would come back down in, let's say, Australia. And instead of that being, I don't even know, 24-hour flight.

it would be one hour ⁓ in the air. this could be the new way that folks get very long distances via point-to-point travel on Earth. And yeah, there's a whole bunch of other sort of infrastructure in space, space resource mining on other planets. There's a lot of academic, military potential. There's folks looking into logistics, delivery of ⁓ goods across long distances on Earth using this.

you know, the key thing is really about whether we're going to get there in terms of the launch cadence and reusability that's necessary to make these all economically viable. Because obviously you don't want to be paying millions for a launch if you want to build a sort of flourishing high volume sales space tourism business. So a lot of it has to do with, can they make Starship?

work with the extremely high kind of payloads, very low marginal cost per flight, full reusability, and standardize that, mass manufacture that, so that this becomes economically viable. That would be kind of the key question for investors to think about, I think, when it comes to the TAM is, do they make it feasible with Starship?

Speaker 2 (30:31)

So launch services you have on this graphic as 15 billion and today they've hit about five billion of that, is that fair? So are you saying that max they've already got like 33 % market share of what's possible?

Speaker 1 (30:44)

They've got pretty big market share. The US is a major player. And this is slightly out of date, maybe 15, 20 now. But yeah, I think so. But that is based on the current state of the amount of demand into space for launch services.

Speaker 2 (31:00)

I I would have to, for the sake of argument, need to believe that if this space manufacturing opportunity and these space opportunities really do happen, I would imagine the lawn services business needs to become bigger market because of demand going up there. It's just for the sake of discussion. Okay, great. We do have a question, kind of tangential. Do we know when SpaceX is going to IPO? Any perspective on that, Yonair?

Speaker 1 (31:26)

Yeah, we talked about this quite a bit last time. And I think the upshot was that Elon has been very, very adamant that he doesn't want to go public with SpaceX. And so taking him at his word and his experience with other public companies and the tribulations of running a public company, I would think that he's being serious. I think with Starlink, you're more likely to see a potential IPO spin-off.

in the next several years. And I think that is due to it becoming a more sort of reliable generator of cashflow and profits, ⁓ more of a predictable business, a telecom versus being yeah, kind of a launch services slash, you know, product studio, you know, venture bet. ⁓ think that I wouldn't be surprised to see Starlink go public for sure.

Speaker 2 (32:14)

And of course we mentioned this before, but if you buy SpaceX shares today or if you own SpaceX shares already, you already have Starlink in those shares. So if it does spin off, you would have that as well. So what do you think is kind of the upside opportunity and what are the risks? Like how big can this become or how does this all implode? Like what are the pros and cons sort of thing?

Speaker 1 (32:36)

Yeah. I mean, upside, obviously, I think that there's pretty significant opportunity if they build Starship and we have a way to reduce the cost, you know, by a magnitude getting into space, you know, unlocking a lot of new businesses that potentially SpaceX can build other star links, right? Other kinds of 10 billion plus.

revenue per year businesses on top of their existing platform, I think makes it an incredibly compelling opportunity. A lot of it hinges on, you know, this kind of technical problem, which, you know, with Starship is significant. But I think, you know, if you believe sort of in Elon Musk's ability to himself and to build a team that can take very big technical problems and

and solve them and spin those solutions out into free cashflow, then I think SpaceX is very compelling in that sense. And also that they just have essentially a monopoly on launch services in the US. But the risks are obviously that they're not. mean, if they do not, or Starship takes a really long time and there's delays, there could be issues with Starlink from a

regulatory perspective, a safety perspective. There's geopolitical risk because countries such as Russia and China don't love having satellites owned by a US-based entrepreneur near their airspace. So there's definitely things that can sort of get in the way of the vision potentially that I think are sort of, those are some of the key things that investors need to also be aware of, even given this sort of exciting.

potential.

Speaker 2 (34:10)

How would you layer in the political stuff, the connections to Trump, the then let's call it the breakup, the implications related to where he stands on the political spectrum or any of that as one's looking to invest? How do you think about that?

Speaker 1 (34:25)

Yeah, it's funny because we did a Elon Musk's empire presentation and on that day he got into a very public Twitter spat with the president and we were forced to sort of talk about that. And since then they've obviously they've seemed to kind of reconcile, right? They've had conversations in public where they seem to put things aside, which is one, it's impressive. And two, it kind of goes to something Elon said.

earlier this year, was, you know, this guy's gonna be in office for a certain number of years, but I'm gonna be around for the next 40 years or 50 years or whatever. And so, you know, this is a guy who runs, you know, the most important sort of rocket company in the world. And so political spats with, you know, people who are in charge now, but won't be in charge in the future, I think, you know, might affect

things in the short term, bumps in the road, but I think long-term, the importance of SpaceX to US technological supremacy and our ability to get into space and have our stake in space, even as Russia tries to go and China tries to compete with us there, I think it's too important for political spats to really have too much of a negative effect.

Speaker 2 (35:41)

Yeah, great reminder. We actually did for those interested an entire conversation on the entire empire, which is Elon Musk. So covering all his companies, all of his high level employees, intricacies of how he moves things in and out of different companies. So you can feel free to check that out with vincent.com or it's also on the podcast, Smart Humans. So again, that's Elon's empire. You know, just as a direct question related to some of that, which again, we covered during an hour.

How concerned should the audience here be that Elon actually has multiple companies and an investment into SpaceX could get tied up into XAI or pulled into Tesla or get distracted or et cetera. Now you could just say, go listen to that hour session, but why don't you give us the one minute version.

Speaker 1 (36:29)

Yeah, that's a great question. think one aspect to remember is, Elon is hands-on in, it seems to me like one or two companies at a time, sort of where things are most urgently, where his help is most urgently needed, but they have very competent staffs running them. mean, at SpaceX, Gwynne Shotwell is widely considered to be sort of the driver and the main force in charge.

you know, for all that they've accomplished over the last ⁓ decade or so that she's been there. So I don't think necessarily that is the biggest concern, even though, you know, I think definitely years ago, people would have said that all the time, but I think that he's sort of born out, it's sort of been born out by reality that he has very competent teams in charge at these businesses and he is sort of the figurehead. And then, sorry, I forget the next part of the question.

Speaker 2 (37:19)

No, you answered it. It's all good. Let's move on to the projections and kind of what we think will happen and then our own opinions on the investment and the price. So can you give your perspective on the ⁓ base bearable case?

Speaker 1 (37:33)

Definitely. So yeah, in going along with sort of what we talked about with risks, I think the bear case, the bear case is not, know, this whole company falls apart tomorrow. It's more that we see, you know, Starship continues to not be finished. I think we see Starlink rollout be kind of slower than expected and maybe, you know, subscriptions to cap out at around 15 million.

which they're at eight or nine today. And overall, think sort of slower growth along with sort of what we've seen over the last year or so, let's say, know, five, 10 % growth year over year, the next five years. And that would net you out. You know, this could be aggressive 12.5 X multiple, $500 billion valuation. You know, it's it's, that would be, you know, 25 % increase in value, but that's over

holding over the next five years, you know, a private stock. Base case, our kind of base case, we're sort of techno-optimists, but ⁓ it hinges on Starlink being successful in terms of going direct to sell, positioning itself as a option for folks to use as their main cell carrier and seeing more of these satellites going up aided in part by, you know, at least ⁓

some early ⁓ Starship deployments. And so, you know, gets you to let's say 70 billion in revenue growing at that 20, 25 % rate and being valued at 17 X. So slightly lower than today, but you know, I think appropriate to the sort of size, the scale of business at that point, which gets you to a one, 1.2, let's say one, one trillion in value ⁓ base case. And then bulk case, let's say it goes crazy.

Starship, they make advancements on Starship and get that out sooner than folks are projecting. And Starlink really blows up because it's, why wouldn't you have super fast cell service that never has a dead spot anywhere and folks start switching over from AT &T and Verizon and mass for home internet, for cell phone, all that. I think there's potential a vision where that happens and you see SpaceX valued at two trillion.

But I do think that's probably more unlikely, more in the what's potentially possible range.

Speaker 2 (39:43)

Awesome. So if you had an opportunity to invest today at 400 billion, again, not taking into account any specific terms or fees and carry, cetera, are you interested? Well, first, it was just 350 billion not that long ago, like six months ago. And just before that, the previous price before 350 billion, I believe was 180 billion, right? So it made like,

a massive jump and then it's a little bit, let's call it steadied. Are you more interested today at 400 billion than at 350 billion six months ago or less interested in the new price today?

Speaker 1 (40:27)

I would say more interested. think from 350 to 400, it's not a big price increase. We can assume that the price would be higher if there was a totally transparent liquid market because of how they suppress demand in these tenders. So I would say the likely price is higher. Plus I'm excited because of what we've seen with Starlink and this purchase of Spectrum. And if you go and watch Elon's discussion with the All In podcast, he says very clearly,

you know, what their plan is, which is to compete as a direct to sell connectivity provider. know, someone mentions buying Verizon and Elon says, well, yeah, maybe that's always an option, which, know, tongue in cheek, maybe, whatever you want to call it. But I think it speaks to the ambition of the business and to kind of what they, maybe really understand what they want to build, you know, with Starlink, which is potentially something really big.

And so that excites me. also just sort of, you know, tend to believe that no matter what else you think about Elon Musk, he has shown a great aptitude for solving and building teams that can solve these technical problems like they have with Starship. so I would, yeah, if I had the opportunity, would definitely, I think invest myself personally, not investment advice.

Speaker 2 (41:35)

Right, non-investment advice. So me as well, I am definitely a fan of SpaceX, non-investment advice. I've invested personally also. I like to say that the best time to get into SpaceX is today because in general it only goes up. Now things only go up until they don't go up. I understand that. But as long as SpaceX is private,

I think the demand is out there and it will continue to go up tender after tender after tender. There could be some dramatic things that happen like we mentioned and something could definitely happen with Elon who knows. But SpaceX is so unique and so differentiated and has such massive markets it's going after. It's just a very long term play. It's just very uniquely interesting.

in my opinion. So I'm quite bullish. Knowing that your base case is about a $1.2 trillion outcome in 2030, that's pretty interesting if you want to try to triple your money on a $400 billion entry point. Now, then again, none of that might happen. And it obviously needs to grow into some of its valuation since back to that chart where we showed the multiples, it was pretty high up on the top and to the right. But I do think it's super unique.

As much as there is, in my opinion, an anthropic to an open AI of a rise into an AT &T, a Alibaba to an Amazon, it's really hard to name who the SpaceX competitor really is today. I we can say Blue Origin, we can say these are, but they're not really, right? Would you agree with that, Yannick?

Speaker 1 (43:16)

Absolutely. I'm glad. Yeah. You mentioned like Anthropic Open AI. It's, think in the LLM space, you've seen how individual engineers and researchers become, you know, a hundred million billion dollar assets because you can hire one from another LLM lab and, know, hire enough of them. Uh, in theory, you get up to parity. Um, you see XAI get to parity with open AI and Anthropic or, or newly to parity, um, very quickly, um, with the sort of intellectual property, you know, acquired.

⁓ from other AI researchers. That same effect has not happened in space manufacturing or, sorry, in launch services. Blue Origin is still well behind SpaceX. There's plenty of folks who know how to do what they did at SpaceX, but there's huge moats in terms of, you know, the learned knowledge and also just capital intensiveness that are baked in to what SpaceX has.

Speaker 2 (44:08)

Yeah, just one final reminder before we sign off here for those that are interested. We do have a unique opportunity through partnership to be able to access SpaceX investment at a fairly low ⁓ entry point. So there's a type form that is in the chat for anybody that's interested. They should just fill that out. You'll be able to access that after this webinar as well and will be following up for those that are interested. The timeline might be very quick.

So if you're not able to make it, that's fine. But you know, fill out your interest and we'll look to try to help direct you towards where the right partner is that can get you that access. Any final word, John, Eric on SpaceX?

Speaker 1 (44:46)

I don't know. I'm just, yeah. It's always fun to talk about SpaceX with you and yeah, glad you had me on to do it again.

Speaker 2 (44:52)

Yeah, the thing that's interesting about SpaceX is it's such a big idea and it is changing pretty rapidly. So we did cover this about six months ago, had a really great conversations with lots of good questions. And the funny thing is there's a lot more new questions and there's lots of changes, including the buying of the spectrum, which is a whole new conversation as to where this can go. So thank you everybody for joining and have a good rest of your day.

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