4 ms·

New York, California pension leaders oppose 'extreme' SpaceX control structure

72 points by 2OEH8eoCRo0 5mo ago

deleted 5mo ago
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AdrianB1 5mo ago
This is subjective, there are companies that are mostly an investment vehicle and companies that have a strong motivation to make changes in the world. Investors, especially passive investors like pension funds that are only interested in returns, should know in advance what they are getting into and decide if they want to buy shares or not; it should not be "I will buy shares and try to change the company". I worked for a company where activist investors bought enough shares to have influence, then practically messed up with the company in a way that today, 10-15 years later, the company is a shadow of what it used to be - fell from top positions in Fortune 500, share price is lower in inflation-adjusted money, management is extremely politized and unprofessional, most professionals left or retired. I don't think this is what we want from SpaceX, in the end this is the company that moved the needle in space launches and cost per launch/kg, it's not a ketchup company that not too many people will cry about.
- Octoth0rpe 5mo ago
  > there are companies that are mostly an investment vehicle and companies that have a strong motivation to make changes in the world. And there are companies that are mostly an investment vehicle whose leaders spin their self-serving decisions as necessary to make changes in the world. Some of them might even be right! (that their decisions are better in the long run, and that ceding more control to shareholders would lead to better short term outcomes but far worse long term outcomes).
- lotsofpulp 5mo ago
  > it should not be "I will buy shares and try to change the company". it should not be “I will go public and try to stop the public from exercising their rights as shareholders”...just stay private. Or, if those business owners want to retain their right to make all the decisions, they should structure the shares like Meta or Alphabet.
  - saalweachter 5mo ago
    Super voting shares were a mistake to allow in general.
    - lotsofpulp 5mo ago
      For whatever reason, there are a few very successful businesses with super voting shares. If the alternative was to keep those businesses private, I do not know if that would have been better for the public. Presumably, the market will price in the risks of super voting shares.
      - kjksf 5mo ago
        > For whatever reason The reason is not "whatever". Only very successful CEOs can negotiate super voting shares. In this context "successful" means "runs very profitable company". If you're crap CEO (your company is not very profitable) then investors won't say "sure, you're crap CEO but we'll give you a complete control so that you can continue to be crap CEO". Only when you're very successful you can negotiate complete control (which investors don't want to give unless they think they'll make lots of money). And the best predictor of future success is past success. Therefore companies run by CEOs with super voting shares were successful in the past and are more likely to be successful in the future.
    - inglor_cz 5mo ago
      Why? Accredited investors don't seem to mind, and they should be able to judge the pluses and the minuses.
      - saalweachter 5mo ago
        Accredited investors did mind for the longest time; dual class shares were banned outright for like 40 years by the NYSE (and they'd declined to list individual companies before that because of investor outcry). They only allowed them again in the 80s as part of the larger wave of "let's stop regulating capital".
  - 5mo ago
- aNoob7000 5mo ago
  As investors for other people, the pension funds, have a fiduciary responsibility to ask questions. I don't care if Space X is changing the world or making potato chips for consumers. If you read the article, they have concerns about the governance structure of Space X and the ability of investors to question what the company is doing.
  - AdrianB1 5mo ago
    I think the investors should NOT invest if they don't like the governance structure. This is calling "voting with your wallet".
    - bluGill 5mo ago
      There is the problem. The fund managers have legal requirements on what they invest in. They don't get a choice in some cases. Which means they sometimes are forced to invest in companies they don't like. (often they had input into the law in years past, but they never imaged this situation and so the law doesn't cover it)
deleted 5mo ago
[deleted]
jt2190 5mo ago
Same article syndicated on msn.com, without paywall: https://www.msn.com/en-us/money/companies/new-york-california-pension-leaders-oppose-extreme-spacex-control-structure/ar-AA23aMe1?ocid=BingNewsVerp https://www.msn.com/en-us/money/companies/new-york-californi... The issues: > The New York and California pension systems would become holders of SpaceX shares through their passive allocations if the company is admitted to major U.S. stock indexes. > The officials… objected to the amount of power the board has given Musk over the company, including: - voting control over the stock, - veto power over his own removal as CEO, and - protections from litigation, including mandatory arbitration for SpaceX shareholder claims. > … > In their letter, the pension leaders urged SpaceX to: - adopt one-share, one-vote or sunset super-voting shares within seven years; - install a majority-independent board and separate the CEO and chair roles; - eliminate provisions protecting Musk from termination without his approval; - scrap mandatory arbitration; and require independent approval of related-party transactions with Musk's other companies. (Formatting mine; moved paragraph about becoming holders above the lists of concerns and recommendations.)
- AndrewKemendo 5mo ago
  I’d love to hear one of you staunch capitalists tell me why the description of this persons control over 13,000+ employees is any different than a feudal “Lord” Over the entire lifetime of SpaceX Nearly 100% of the revenue comes from the government They pay gifts and tributes to the government They spend an absurd amount of money on lobbying and writing laws to take monopoly control of the subsection of the market What am I missing here? Pretty sure there’s Universal agreement that the feudal system is not something anybody should be promoting
  - iamronaldo 5mo ago
    Why lie about something that's easily proven false with a Google search? Over last 5 years government revenue is under 25% and if you go off of last 2 years its closer to like 10-15% (and declining!) Starlink is the vast majority of spacex revenue
    - 5mo ago
mittensc 5mo ago
good, pensions should not go into companies where you have no control. That's not an investment, it's a wealth transfer to original investors at a price they dictate. without control you can get original founder deciding to build cybertrucks and associating your brand with nazis. These should not be included in indexes either.
jmuguy 5mo ago
I'm more worried about the early inclusion into the Nasdaq 100 index and if other indexes will follow. I don't want my retirement to be passively buying Elon's latest shell game.
- altcognito 5mo ago
  This is why he (and other billionaires) are pining to get Social Security replaced with an indexed based retirement fund?
  - jmuguy 5mo ago
    Who knows, I mean it would certainly make it easier for them to turn the entire population into their bag holders. Don't even have to hype the company any more or spin up a bunch of bullshit about space.
  - funimpoded 5mo ago
    Absolutely, that's the main reason there's been a push for that for decades. It's a giant pile of poor people's money that rich people can't easily skim from, and they'd really, really like to. Once it's "in the market" they gain all kinds of options for turning some of that money into their money, some immediately, some with tweaks to laws or policy.
    - trunkiedozer 5mo ago
      That’s literally not how it works. You buy a share of stock and participate in their gains. For example, I owned a bunch of Tesla stock since around 2017. Now I have a ton in the stock as well as a new house and a model s plaid thanks to their greatness. Did the same with Apple, that is my retirement and travel fund. it ain’t hard.
      - funimpoded 5mo ago
        > You buy a share of stock and participate in their gains That is "literally not how it works", as you missed "... and losses". Since dividends aren't really a thing any more and gains are ~100% from stock prices increasing, existing holders of securities would really like a bunch more money to come shopping and drive that price up. Very helpful if you want to make sure a period where "... and losses" seems like a silly thing to be worried about keeps going for a while longer. Bunch of folks out there would love to be taking management fees on funds that're required by law to receive 10ish% of every middle-class-and-under working American's paycheck (some at the higher end of the pay scale pay less than that, because of the cutoff, and of course anyone rich enough not to have wage income pays no FICA at all). Others would like to game the system to make Social Security a huge, deep-pocketed buyer for their scams. This is for when "... and losses" starts really biting people.
jbecke 5mo ago
Option 1: Elon has control and optimizes for cool shit and going to Mars, and maybe abuses the corporate entity a bit, as a piggy bank, or whatever. Option 2: the market has control, and optimizes for short term starlink revenue and the launch business. I prefer Option 1.
- shafyy 5mo ago
  You must be living under a rock if you think all super rich billionaires like Musk are doing is "abuses the corporate entity a bit, as a piggy bank, or whatever"
  - jbecke 5mo ago
    You can either concentrate power or disperse it. NASA, Boing, etc. is what happens when you disperse it. Committees aren't bold. The reason SpaceX exists is because Elon willed it into existence.
    - ben_w 5mo ago
      > The reason SpaceX exists is because Elon willed it into existence. And then sued the government into considering using them. He's also setting the rules so shareholders can't sue him. Concentrated power can indeed get a lot more done at speed; it does not say anything about if the things being done more of and faster are sensible, and while Musk used to make bets that seemed to be risky to him but with positive expected return, he's now openly talking about things like wanting the Tesla "robot army" under his control and the chance of AI killing everyone, where it becomes everyone else's problem if he's wrong.
- inglor_cz 5mo ago
  I suspect that the set of interested investors would look very different in both cases. Maybe even with an empty intersection.
- pjc50 5mo ago
  Option 3: Elon takes over the Federal government, causes some major security incidents, and cuts off USAID stranding a number of Federal employees and cutting off short term food support for hundreds of thousands of people depending on it. Option 4: Elon takes over a social network and tries to Orbanize the West with it.
khriss 5mo ago
> Elon has control and optimizes for cool shit and going to Mars This trope needs to die. SpaceX has no plans to go to Mars. Elon meanwhile regularly says forward looking stuff to attempt to justify the lofty valuations of his companies. Let's just say there is a ... mixed track record on these proclamations (Full self driving, Hyperloop anyone?)
- ralfd 5mo ago
  This trope has to die. SpaceX Starship design is optimized for Mars (instead of Blue Origin NG) and the gigantic Starship Factory and multiple launch pads under construction in Texas, Florida and Louisiana (plus potentially foreign countries) only make sense with Mars.
  - ben_w 5mo ago
    While yes, I agree Mars appears to have been Musk's long term goals: > the gigantic Starship Factory and multiple launch pads under construction in Texas, Florida and Louisiana (plus potentially foreign countries) only make sense with Mars. There's a few other things that also make sense as use-cases for that infrastructure. Orbital manufacturing is already starting to get interesting. I don't want to bet either way on space-based data centres, the research I've seen from Google says that makes sense at $200/kg which Starship can only reach if SpaceX solves re-use and that's clearly difficult but I don't want to say impossible.
  - jauntywundrkind 5mo ago
    Or the attempt to Kessler Syndrome and Neuromancer it up as fast as possible by trying to send up 1m satellites. https://spacenews.com/spacex-files-plans-for-million-satellite-orbital-data-center-constellation/ https://spacenews.com/spacex-files-plans-for-million-satelli...
    - OutOfHere 5mo ago
      I don't think these will be in Earth orbit. I think they will be in Sol's orbit.
RhysU 5mo ago
> The New York and California pension systems would become holders of SpaceX shares through their passive allocations if the company is admitted to major U.S. stock indexes. If they have discretion, these pensions can replicate the S&P500 minus SpaceX if they don't like SpaceX's governance. If they're forced to passively hold precisely the S&P500 then shaddup and stop active managing. Next.
- bell-cot 5mo ago
  > If they have discretion... True. But doing so would be a fair amount (by index standards) of overhead and hassle. Plus they'd get endless complaints any time the S&P500 was outperforming the "S&P 499" that they were using. Plus they'd put themselves in the crosshairs of a whole range of activists who wanted them to switch to an "S&P 498", or ...497, or ... - by excluding various other companies the activists didn't like. > If they're forced to passively hold... Their responsibility is managing their pension funds in the interests of their state, and their current & future retirees. Not pious adherence to passive indexing canon. Their calculus here might be to throw a small bone to the anti-Musk activists who are currently bothering them, while acquiring some "we tried!" butt-coverage for whenever Musk really goes off the rails. (And, obviously, trying to discourage other companies from using such control structures.)
  - RhysU 5mo ago
    > But doing so would be a fair amount (by index standards) of overhead and hassle. Any product provider, like Blackrock, would jump at the opportunity to sell them an S&P499 given the scale of those pension funds. > Plus they'd put themselves in the crosshairs of a whole range of activists... Not to mention putting their own jobs on the line if SpaceX outperformed the rest of the index. The first point, that an S&P499 is easy for them but they won't do it, means they have no conviction. The second point (where I agree with you), that it's obvious we-tried CYA lacking any real teeth that'll go nowhere, means they have no courage. They're an asset manager: put your money where your mouth is. If their hypothesis is that SpaceX governance will be bad then short the bloody thing and use the proceeds to buy the S&P499. It's not a complicated trade given their industry position and ability to call third-party providers.
trunkiedozer 5mo ago
Then don’t buy the stock
randallsquared 5mo ago
> would constitute the most management-favorable governance structure ever brought to the U.S. public markets at this scale The "at this scale" is doing a lot of work here. The SpaceX IPO will be $1.5T to $2T, and the next highest IPO ever on the US public markets was Alibaba at $231B. This is so far outside the previous scale that their statement would be true even if EVERY other public company was structured in the same way. Worldwide, the five highest have been Saudi Aramco, NTT, Alibaba, Facebook, and Uber, at 1.7T, 300B, 231B, 104B, and 75B. Note the outlier, here, which was not on the US public market, AND has a very similar tiny float. If you go by capital raised, it's not quite as stark, but it's still quite different in the US market: 25B raised by Alibaba, the previous high, compared to 75B expected for SpaceX according to the article. The point that SpaceX isn't at the same scale regardless of governance is still pretty good, I think.
jmyeet 5mo ago
The SpaceX IPO may go down as one of the most manipulated in US history. I'd actually like to see the likes of Vanguard and Blackrock do is ignore the rules that will force passive funds to invest in SpaceX on a small float, creating passive funds with their own rules that won't invest in small floats. I know I'd move my money to more "total market" type funds that required their investments to be sufficiently liquid. It may not even come to that. I think if large pension funds and the large mutual fund managers coming out and saying "we don't trust this process" will probably be sufficient pressure to change it. There are two other issues with SpaceX in particular that kind of show just what a house of cards the Elon Empire is: 1. The whole xAI bailout. This isn't a new tactic. Elon did it with SolarCity where one of his companies bought another of his companies who owed a lot of money to yet another of his companies. Elon way overpaid for Twitter. Fidelity had slashed the valuation by as much as 80%. Elon rescued himself from a margin call on his Tesla shares by raising money for xAI and using that to buy Twitter. But now the xAI investors who (IMHO) felt fleeced had to be rescued and so SpaceX "bought" xAI. So the problem is that I've seen reports that xAI is losing >$1B/month. That's a huge drain on SpaceX's estimated ~$15B of annual revenue where it's already losing money due to the Starship program cost and delays; 2. Allegedly, one of the biggest buyers of Cybertrucks is (drum roll please) SpaceX. So, again, one Elon company is rescuing another. I have huge respect for what SpaceX achieved with Falcon 9 but honestly, I wouldn't touch any of this, as an investor, wtih a 10 foot barge pole. At least, not until the SpaceX float gets sufficiently large and the lock ups on selling expire so you get a true market picture of its value. And I think passive investors need to rewrite their rules to do this too.
irthomasthomas 5mo ago
It's interesting how Musk has engaged in such a distracting lawsuit against openai while he also prepares for the largest deal of his life, and the largest IPO in history. Exceedingly generous of him.
outside1234 5mo ago
They, and the S&P 500, need to declare that they will refuse to invest in it with this structure. Honestly, I'd like to see the S&P 500 also require two years of profit as a public company before investing as well.
rjmunro 5mo ago
According to Gemini, index funds in total own about 20% of the value on the Nasdaq 100 index. So if you list a new company in Nasdaq, typically they have to buy 20% of it. But only about 5% of SpaceX will floated, which means there won't be enough shares to go round. They are doing a bunch of changes to rules to try and make this not completely break, but even if it doesn't, it feels like index funds are going to have to buy a lot of the SpaceX float, which is going to make it look like a successful IPO even if hardly any real investors buy it.
trunkiedozer 5mo ago
I know few here will understand this, but trust me, from an older wiser very successful investor, do yourself a favor, get into the stock market early, no excuses. Pick companies you know will do well. You’ll be able to control your future. Spacex will create more millionaires than Tesla + Apple + Microsoft combined.

72 points by 2OEH8eoCRo0 5mo ago

deleted 5mo ago

[deleted]

This is subjective, there are companies that are mostly an investment vehicle and companies that have a strong motivation to make changes in the world. Investors, especially passive investors like pension funds that are only interested in returns, should know in advance what they are getting into and decide if they want to buy shares or not; it should not be "I will buy shares and try to change the company". I worked for a company where activist investors bought enough shares to have influence, then practically messed up with the company in a way that today, 10-15 years later, the company is a shadow of what it used to be - fell from top positions in Fortune 500, share price is lower in inflation-adjusted money, management is extremely politized and unprofessional, most professionals left or retired. I don't think this is what we want from SpaceX, in the end this is the company that moved the needle in space launches and cost per launch/kg, it's not a ketchup company that not too many people will cry about.

Octoth0rpe 5mo ago
> there are companies that are mostly an investment vehicle and companies that have a strong motivation to make changes in the world. And there are companies that are mostly an investment vehicle whose leaders spin their self-serving decisions as necessary to make changes in the world. Some of them might even be right! (that their decisions are better in the long run, and that ceding more control to shareholders would lead to better short term outcomes but far worse long term outcomes).
lotsofpulp 5mo ago
> it should not be "I will buy shares and try to change the company". it should not be “I will go public and try to stop the public from exercising their rights as shareholders”...just stay private. Or, if those business owners want to retain their right to make all the decisions, they should structure the shares like Meta or Alphabet.
- saalweachter 5mo ago
  Super voting shares were a mistake to allow in general.
  - lotsofpulp 5mo ago
    For whatever reason, there are a few very successful businesses with super voting shares. If the alternative was to keep those businesses private, I do not know if that would have been better for the public. Presumably, the market will price in the risks of super voting shares.
    - kjksf 5mo ago
      > For whatever reason The reason is not "whatever". Only very successful CEOs can negotiate super voting shares. In this context "successful" means "runs very profitable company". If you're crap CEO (your company is not very profitable) then investors won't say "sure, you're crap CEO but we'll give you a complete control so that you can continue to be crap CEO". Only when you're very successful you can negotiate complete control (which investors don't want to give unless they think they'll make lots of money). And the best predictor of future success is past success. Therefore companies run by CEOs with super voting shares were successful in the past and are more likely to be successful in the future.
  - inglor_cz 5mo ago
    Why? Accredited investors don't seem to mind, and they should be able to judge the pluses and the minuses.
    - saalweachter 5mo ago
      Accredited investors did mind for the longest time; dual class shares were banned outright for like 40 years by the NYSE (and they'd declined to list individual companies before that because of investor outcry). They only allowed them again in the 80s as part of the larger wave of "let's stop regulating capital".
- 5mo ago
aNoob7000 5mo ago
As investors for other people, the pension funds, have a fiduciary responsibility to ask questions. I don't care if Space X is changing the world or making potato chips for consumers. If you read the article, they have concerns about the governance structure of Space X and the ability of investors to question what the company is doing.
- AdrianB1 5mo ago
  I think the investors should NOT invest if they don't like the governance structure. This is calling "voting with your wallet".
  - bluGill 5mo ago
    There is the problem. The fund managers have legal requirements on what they invest in. They don't get a choice in some cases. Which means they sometimes are forced to invest in companies they don't like. (often they had input into the law in years past, but they never imaged this situation and so the law doesn't cover it)

deleted 5mo ago

[deleted]

jt2190 5mo ago

Same article syndicated on msn.com, without paywall: https://www.msn.com/en-us/money/companies/new-york-california-pension-leaders-oppose-extreme-spacex-control-structure/ar-AA23aMe1?ocid=BingNewsVerp https://www.msn.com/en-us/money/companies/new-york-californi... The issues: > The New York and California pension systems would become holders of SpaceX shares through their passive allocations if the company is admitted to major U.S. stock indexes. > The officials… objected to the amount of power the board has given Musk over the company, including: - voting control over the stock, - veto power over his own removal as CEO, and - protections from litigation, including mandatory arbitration for SpaceX shareholder claims. > … > In their letter, the pension leaders urged SpaceX to: - adopt one-share, one-vote or sunset super-voting shares within seven years; - install a majority-independent board and separate the CEO and chair roles; - eliminate provisions protecting Musk from termination without his approval; - scrap mandatory arbitration; and require independent approval of related-party transactions with Musk's other companies. (Formatting mine; moved paragraph about becoming holders above the lists of concerns and recommendations.)

AndrewKemendo 5mo ago
I’d love to hear one of you staunch capitalists tell me why the description of this persons control over 13,000+ employees is any different than a feudal “Lord” Over the entire lifetime of SpaceX Nearly 100% of the revenue comes from the government They pay gifts and tributes to the government They spend an absurd amount of money on lobbying and writing laws to take monopoly control of the subsection of the market What am I missing here? Pretty sure there’s Universal agreement that the feudal system is not something anybody should be promoting
- iamronaldo 5mo ago
  Why lie about something that's easily proven false with a Google search? Over last 5 years government revenue is under 25% and if you go off of last 2 years its closer to like 10-15% (and declining!) Starlink is the vast majority of spacex revenue
  - 5mo ago

mittensc 5mo ago

good, pensions should not go into companies where you have no control. That's not an investment, it's a wealth transfer to original investors at a price they dictate. without control you can get original founder deciding to build cybertrucks and associating your brand with nazis. These should not be included in indexes either.

jmuguy 5mo ago

I'm more worried about the early inclusion into the Nasdaq 100 index and if other indexes will follow. I don't want my retirement to be passively buying Elon's latest shell game.

altcognito 5mo ago
This is why he (and other billionaires) are pining to get Social Security replaced with an indexed based retirement fund?
- jmuguy 5mo ago
  Who knows, I mean it would certainly make it easier for them to turn the entire population into their bag holders. Don't even have to hype the company any more or spin up a bunch of bullshit about space.
- funimpoded 5mo ago
  Absolutely, that's the main reason there's been a push for that for decades. It's a giant pile of poor people's money that rich people can't easily skim from, and they'd really, really like to. Once it's "in the market" they gain all kinds of options for turning some of that money into their money, some immediately, some with tweaks to laws or policy.
  - trunkiedozer 5mo ago
    That’s literally not how it works. You buy a share of stock and participate in their gains. For example, I owned a bunch of Tesla stock since around 2017. Now I have a ton in the stock as well as a new house and a model s plaid thanks to their greatness. Did the same with Apple, that is my retirement and travel fund. it ain’t hard.
    - funimpoded 5mo ago
      > You buy a share of stock and participate in their gains That is "literally not how it works", as you missed "... and losses". Since dividends aren't really a thing any more and gains are ~100% from stock prices increasing, existing holders of securities would really like a bunch more money to come shopping and drive that price up. Very helpful if you want to make sure a period where "... and losses" seems like a silly thing to be worried about keeps going for a while longer. Bunch of folks out there would love to be taking management fees on funds that're required by law to receive 10ish% of every middle-class-and-under working American's paycheck (some at the higher end of the pay scale pay less than that, because of the cutoff, and of course anyone rich enough not to have wage income pays no FICA at all). Others would like to game the system to make Social Security a huge, deep-pocketed buyer for their scams. This is for when "... and losses" starts really biting people.

jbecke 5mo ago

Option 1: Elon has control and optimizes for cool shit and going to Mars, and maybe abuses the corporate entity a bit, as a piggy bank, or whatever. Option 2: the market has control, and optimizes for short term starlink revenue and the launch business. I prefer Option 1.

shafyy 5mo ago
You must be living under a rock if you think all super rich billionaires like Musk are doing is "abuses the corporate entity a bit, as a piggy bank, or whatever"
- jbecke 5mo ago
  You can either concentrate power or disperse it. NASA, Boing, etc. is what happens when you disperse it. Committees aren't bold. The reason SpaceX exists is because Elon willed it into existence.
  - ben_w 5mo ago
    > The reason SpaceX exists is because Elon willed it into existence. And then sued the government into considering using them. He's also setting the rules so shareholders can't sue him. Concentrated power can indeed get a lot more done at speed; it does not say anything about if the things being done more of and faster are sensible, and while Musk used to make bets that seemed to be risky to him but with positive expected return, he's now openly talking about things like wanting the Tesla "robot army" under his control and the chance of AI killing everyone, where it becomes everyone else's problem if he's wrong.
inglor_cz 5mo ago
I suspect that the set of interested investors would look very different in both cases. Maybe even with an empty intersection.
pjc50 5mo ago
Option 3: Elon takes over the Federal government, causes some major security incidents, and cuts off USAID stranding a number of Federal employees and cutting off short term food support for hundreds of thousands of people depending on it. Option 4: Elon takes over a social network and tries to Orbanize the West with it.

khriss 5mo ago

> Elon has control and optimizes for cool shit and going to Mars This trope needs to die. SpaceX has no plans to go to Mars. Elon meanwhile regularly says forward looking stuff to attempt to justify the lofty valuations of his companies. Let's just say there is a ... mixed track record on these proclamations (Full self driving, Hyperloop anyone?)

ralfd 5mo ago
This trope has to die. SpaceX Starship design is optimized for Mars (instead of Blue Origin NG) and the gigantic Starship Factory and multiple launch pads under construction in Texas, Florida and Louisiana (plus potentially foreign countries) only make sense with Mars.
- ben_w 5mo ago
  While yes, I agree Mars appears to have been Musk's long term goals: > the gigantic Starship Factory and multiple launch pads under construction in Texas, Florida and Louisiana (plus potentially foreign countries) only make sense with Mars. There's a few other things that also make sense as use-cases for that infrastructure. Orbital manufacturing is already starting to get interesting. I don't want to bet either way on space-based data centres, the research I've seen from Google says that makes sense at $200/kg which Starship can only reach if SpaceX solves re-use and that's clearly difficult but I don't want to say impossible.
- jauntywundrkind 5mo ago
  Or the attempt to Kessler Syndrome and Neuromancer it up as fast as possible by trying to send up 1m satellites. https://spacenews.com/spacex-files-plans-for-million-satellite-orbital-data-center-constellation/ https://spacenews.com/spacex-files-plans-for-million-satelli...
  - OutOfHere 5mo ago
    I don't think these will be in Earth orbit. I think they will be in Sol's orbit.

RhysU 5mo ago

> The New York and California pension systems would become holders of SpaceX shares through their passive allocations if the company is admitted to major U.S. stock indexes. If they have discretion, these pensions can replicate the S&P500 minus SpaceX if they don't like SpaceX's governance. If they're forced to passively hold precisely the S&P500 then shaddup and stop active managing. Next.

bell-cot 5mo ago
> If they have discretion... True. But doing so would be a fair amount (by index standards) of overhead and hassle. Plus they'd get endless complaints any time the S&P500 was outperforming the "S&P 499" that they were using. Plus they'd put themselves in the crosshairs of a whole range of activists who wanted them to switch to an "S&P 498", or ...497, or ... - by excluding various other companies the activists didn't like. > If they're forced to passively hold... Their responsibility is managing their pension funds in the interests of their state, and their current & future retirees. Not pious adherence to passive indexing canon. Their calculus here might be to throw a small bone to the anti-Musk activists who are currently bothering them, while acquiring some "we tried!" butt-coverage for whenever Musk really goes off the rails. (And, obviously, trying to discourage other companies from using such control structures.)
- RhysU 5mo ago
  > But doing so would be a fair amount (by index standards) of overhead and hassle. Any product provider, like Blackrock, would jump at the opportunity to sell them an S&P499 given the scale of those pension funds. > Plus they'd put themselves in the crosshairs of a whole range of activists... Not to mention putting their own jobs on the line if SpaceX outperformed the rest of the index. The first point, that an S&P499 is easy for them but they won't do it, means they have no conviction. The second point (where I agree with you), that it's obvious we-tried CYA lacking any real teeth that'll go nowhere, means they have no courage. They're an asset manager: put your money where your mouth is. If their hypothesis is that SpaceX governance will be bad then short the bloody thing and use the proceeds to buy the S&P499. It's not a complicated trade given their industry position and ability to call third-party providers.

trunkiedozer 5mo ago

Then don’t buy the stock

randallsquared 5mo ago

> would constitute the most management-favorable governance structure ever brought to the U.S. public markets at this scale The "at this scale" is doing a lot of work here. The SpaceX IPO will be $1.5T to $2T, and the next highest IPO ever on the US public markets was Alibaba at $231B. This is so far outside the previous scale that their statement would be true even if EVERY other public company was structured in the same way. Worldwide, the five highest have been Saudi Aramco, NTT, Alibaba, Facebook, and Uber, at 1.7T, 300B, 231B, 104B, and 75B. Note the outlier, here, which was not on the US public market, AND has a very similar tiny float. If you go by capital raised, it's not quite as stark, but it's still quite different in the US market: 25B raised by Alibaba, the previous high, compared to 75B expected for SpaceX according to the article. The point that SpaceX isn't at the same scale regardless of governance is still pretty good, I think.

jmyeet 5mo ago

The SpaceX IPO may go down as one of the most manipulated in US history. I'd actually like to see the likes of Vanguard and Blackrock do is ignore the rules that will force passive funds to invest in SpaceX on a small float, creating passive funds with their own rules that won't invest in small floats. I know I'd move my money to more "total market" type funds that required their investments to be sufficiently liquid. It may not even come to that. I think if large pension funds and the large mutual fund managers coming out and saying "we don't trust this process" will probably be sufficient pressure to change it. There are two other issues with SpaceX in particular that kind of show just what a house of cards the Elon Empire is: 1. The whole xAI bailout. This isn't a new tactic. Elon did it with SolarCity where one of his companies bought another of his companies who owed a lot of money to yet another of his companies. Elon way overpaid for Twitter. Fidelity had slashed the valuation by as much as 80%. Elon rescued himself from a margin call on his Tesla shares by raising money for xAI and using that to buy Twitter. But now the xAI investors who (IMHO) felt fleeced had to be rescued and so SpaceX "bought" xAI. So the problem is that I've seen reports that xAI is losing >$1B/month. That's a huge drain on SpaceX's estimated ~$15B of annual revenue where it's already losing money due to the Starship program cost and delays; 2. Allegedly, one of the biggest buyers of Cybertrucks is (drum roll please) SpaceX. So, again, one Elon company is rescuing another. I have huge respect for what SpaceX achieved with Falcon 9 but honestly, I wouldn't touch any of this, as an investor, wtih a 10 foot barge pole. At least, not until the SpaceX float gets sufficiently large and the lock ups on selling expire so you get a true market picture of its value. And I think passive investors need to rewrite their rules to do this too.

irthomasthomas 5mo ago

It's interesting how Musk has engaged in such a distracting lawsuit against openai while he also prepares for the largest deal of his life, and the largest IPO in history. Exceedingly generous of him.

outside1234 5mo ago

They, and the S&P 500, need to declare that they will refuse to invest in it with this structure. Honestly, I'd like to see the S&P 500 also require two years of profit as a public company before investing as well.

rjmunro 5mo ago

According to Gemini, index funds in total own about 20% of the value on the Nasdaq 100 index. So if you list a new company in Nasdaq, typically they have to buy 20% of it. But only about 5% of SpaceX will floated, which means there won't be enough shares to go round. They are doing a bunch of changes to rules to try and make this not completely break, but even if it doesn't, it feels like index funds are going to have to buy a lot of the SpaceX float, which is going to make it look like a successful IPO even if hardly any real investors buy it.

trunkiedozer 5mo ago

I know few here will understand this, but trust me, from an older wiser very successful investor, do yourself a favor, get into the stock market early, no excuses. Pick companies you know will do well. You’ll be able to control your future. Spacex will create more millionaires than Tesla + Apple + Microsoft combined.