Elon Musk is steamrolling Wall Street to become a trillionaire

Today on Decoder, I’m talking to Ryan Mac, a technology reporter at The New York Times and coauthor of the excellent book Character Limit: How Elon Musk Destroyed Twitter, which came out in 2024. I can’t recommend it enough. I wanted to have Ryan on the show because we’re on the cusp of the SpaceX IPO, which promises to be one of the most consequential public offerings in history for a variety of reasons — its biggest-ever size, of course, at nearly $2 trillion dollars, but also because all kinds of rules that keep our markets fair are being bent, if not outright broken, along the way. I also wanted to talk to Ryan because buried somewhere inside SpaceX is X, the social platform formerly known as Twitter, which Musk purchased in 2022. That’s what Ryan cowrote that book about. I was very confident that Musk would come to regret buying Twitter back then. I wrote a piece called “Welcome To hell, Elon,” which is probably the single most-read thing I’ve ever written. My thesis was that there would be no way to grow Twitter users and revenue without moderating the platform well and, ultimately, that Elon buying Twitter would destroy his reputation and cause damage to his other companies. Now, we have the numbers from the SpaceX IPO filing to see how right my prediction was. X is shrinking by every major metric, but it may not matter, as Ryan points out. Take a listen, and let me know what you think. Ryan and I also got into all those rules being broken to land the SpaceX IPO — rules about shareholder control, inclusion in the major index funds, and all the other levers of market accountability that usually serve to keep companies in check. You’re going to hear us say “corporate governance” a lot in this episode, and while it may sound boring, it won’t be if you take a shot every time it comes up. Okay, don’t do that. But do consider what it means that Elon has become so rich, so powerful, and so detached from the levers of accountability that he can apparently get away with anything. That’s all without any of the major fund managers or investors calling foul because they don’t want to miss out on what could be the biggest financial windfall in recent memory. There’s a lot to think about in this episode. Okay: New York Times tech reporter Ryan Mac, on Elon Musk, X, and the SpaceX IPO. Here we go. This interview has been lightly edited for length and clarity. Ryan Mac, you’re a technology reporter at the New York Times. Welcome to Decoder. Thanks for having me. I am really excited to talk to you. I can’t believe you’ve never been on the show before. I feel like we’ve done a lot of reporting in and around each other. I’m a big fan. Thanks so much for being on. I know. What the hell, man? You just have avoided me this whole time. But no, I’m kidding. It’s good to be here. I’ve listened to many episodes, so great to be a part of it. Well, now we’re going to ask you to answer for your crimes, which is what the Decoder audience really wants me to do, I guess. Speaking of crimes, we’re going to talk about the SpaceX IPO. Elon Musk has obviously filed to take SpaceX public. There’s a lot in that IPO, including the idea that there’s a $28 trillion addressable market for SpaceX services, which is more than the world. Just a lot in there. You’ve reported on a lot of it. So I do want to dive into it, but I actually want to start with X, the everything app, the app formerly known as Twitter. Because the SpaceX S-1 really gives us our first look into what that business is, what it has become, where it’s growing. In 2022, I wrote an article — maybe the most viral article I’ve ever written — it was called “Welcome to hell, Elon,” in which I very confidently predicted that buying Twitter would be a disaster for Elon Musk. I’m just going to read you my thesis. It was the first sentence of the piece. And then I want to try to back into what we know about X. I’m very curious if you think this has come true or not. So my thesis was: “Twitter is a disaster clown car company that is successful despite itself and there is no possible way to grow users and revenue without making a series of enormous compromises that will ultimately destroy Elon Musk’s reputation and possibly cause grievous damage to his other companies.” There’s one view to say, “Yep, that totally came true.” There’s another view to say that actually Elon is more powerful than ever and on the cusp of an IPO that’s going to make him a trillionaire. So tell me about X. What do we know about X, the company in the years since Elon has bought it and what do we know about its financials as reported in this S-1? Sure. I think you mentioned the word “growing” in all that and I think the place to start is the fact that X is simply not growing. It’s stagnated in terms of revenue, stagnated in terms of user growth. It’s been buried twice within Elon’s companies — first into xAI and now into SpaceX. So it’s become, in some ways, an afterthought in the Musk empire, despite it still being arguably Musk’s favorite thing. He spends countless hours a day on that thing, like many of us used to, and many of us still do. But in terms of a business proposition, it’s a non-factor if you compare it to some of the other aspects of this business — something like Starlink, for example. If you look back at 2022, it’s just bizarre. He bought this company on a whim. He pitched this idea to investors that he would have one billion users. He would have integrated payments. It would be somewhere you could potentially book a taxi. He pitched this idea of it being WeChat. You mentioned the everything app. And it’s certainly not the everything app. At one point he was like, “You could watch TV on it.” None of that has come to fruition. Yet I look at what’s happened in the last four to five years since then, and he’s gotten more powerful than ever. His net worth has increased. I think around the time he bought the company he was around $300 billion. His net worth now fluctuates anywhere from $600 to $800 billion these days. And a SpaceX IPO will take him potentially beyond the trillion dollar mark for the first time ever in human history. So it’s bizarre in that there are a lot of contradictory things about it, but at the end of the day, I’d argue he still comes out on top. Is it just as simple as he bought a distribution platform for his own tweets and he controlled it and he fixed the algorithm to favor himself and that worked? And it doesn’t matter that revenue is down $100 million year over year and not even quite 40 percent of Twitter’s pre-acquisition revenue? He’s destroyed the business by every metric we can see in the S-1. Every number is down. And only the revenue from data licensing to AI companies is up. His own AI company too. Yes, if you singularly look at X as a business, it’s clearly a failure from the time he took over the company to Fidelity marking the valuation of the company down to $10 billion before he merged it with xAI. But also you have to look at it in the whole landscape of Musk Inc. Since he bought the company, he spun up xAI, raised billions of dollars for that company. He then merged it into xAI, burying it, and then he merged it again with xAI into SpaceX. I guess he’s up, if you’re doing a plus-minus analysis of valuations of these companies. Again, these are valuations that seemingly have no basis in business fundamentals. We’re playing with Musk math here. He has this whole cadre of investors and friends that are willing to back him to the end of the Earth, but yeah, he’s, I’d say, winning. There’s a version of this where you could straightforwardly make the argument that however many billions he lost on Twitter is worth it as an investment that got him to, “We’re going to do a trillion-dollar SpaceX IPO.” Yeah, and I caution against looking back at it historically and thinking that was his plan all along. There is this trope that came up after Trump won the election that Elon Musk bought X to then help elect Donald Trump. There was really no proof of that, especially when we did our reporting at The Times and for our book Character Limit, but it has worked out for him. It’s indisputable in that sense. He has bought a distribution platform for his own tweets. He’s the most followed person on the platform now. He controls the algorithm, he controls the content that gets boosted on the platform. I don’t know how to say this more, but he’s winning and that’s just where we are right now in society. In the pre-X days when it was still Twitter, Elon would constantly talk about how he didn’t do any marketing for Tesla. They had spent no money in advertising, no money in marketing. He would just tweet to move Tesla sales up and down. And there was infinite demand for the Tesla Model 3 in particular and the Model Y. So much so that every other car maker essentially got confused and made Tesla Model Ys of their own. They just thought people wanted electric cars. And maybe they just wanted Tesla’s and maybe there was a meme stock component to it, but Elon was just very good at using Twitter to drive demand for his products. He would constantly say, “I don’t have to pay for marketing. I just have this platform.” The other part of my thesis was that buying X and changing the algorithm and being as political as he has been would cause reputational damage to Elon, would cause reputational damage to his companies. There’s some evidence that that is true in the case of Tesla, where the cars are less popular than they once were, certainly. There are campaigns to protest at Tesla dealerships. Is that true for SpaceX? Is it true for the rest of his empire? It’s a great question. And with Tesla, of course, after the election, you saw the Tesla Takedown protests, people slapping those bumper stickers on their cars: “I bought this before Elon went crazy.” You could see the share of the Tesla market in the EV market falling. Of course, there’s a lot to do with the rise of Chinese vehicle manufacturers like BYD. But I don’t know. I don’t think I see the same kind of reputational harm to SpaceX that I’ve seen with Tesla. And that may be because there’s just not as much consumer contact with parts of SpaceX. I think of something like the launch business. I’m not going out and buying a launch. Regular people aren’t buying launches; SpaceX is contracting with governments and big companies. Not to mention that they largely have a monopoly on getting things into space. If your option is working with a company that has a CEO that is reputationally compromised versus not getting into space at all, you’ll probably go with the former. Starlink is another basket. It offers a product that is quite good and is not challenged in any way. I think of something like Iridium, for example, or the companies it competes against, and it just blows them out of the water. It’s such a strong service, so much so that governments rely on it and Ukraine relies on it and the numbers there continue to grow. That’s the crown jewel of the SpaceX business empire right now in terms of revenue and profit. There’s no moral case to be made for being on Hughesnet still. You can’t be a better person by being on some of the other satellite providers that service the rural parts of the country. We see it in our own traffic and our own comments. We cover Starlink. There’s nothing better. They continue to innovate in the ways they continue to innovate and the audience doesn’t like it, but then there’s a huge part of the audience that says, “Wait, I don’t have a market alternative to this.” You’re saying where there isn’t a market alternative, the reputational issues have not been a problem and every place where there might be or there’s a consumer market, the reputational issues have damaged it. I think X is actually the example of this. There are a number of market alternatives to X, so people have just left the platform. Whether or not there’s one big competitor to X

[truncated for AI cost control]