Latest / Elon Musk Podcast / EXCLUSIVE: SPACEX and XAI MERGER!

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EXCLUSIVE: SPACEX and XAI MERGER! · Elon Musk Podcast

• 0:00
  So Elon Musk had just created the most valuable private
• 0:04
  company on Earth, and possibly outside of Earth too.
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  Like in the realm of orbit of Earth, SpaceX and XAI are
• 0:16
  merging. The combined entity is valued at
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  $1.25 trillion. That's a trillion with AT.
• 0:23
  To put that into perspective, that's larger than the entire
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  GDP of the Netherlands. One man now controls a company
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  worth more than many countries produce in a year.
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  The move combines Musk's rocket empire of SpaceX with his
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  artificial intelligence company into a single corporate
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  structure. I got a lot of thoughts on why
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  this is happening and what it means for the space industry and
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  why the timing really matters more than you might think.
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  And we're going to get back into that after this very short
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  break. Now, let's start with the
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  number, the valuation, because it's genuinely staggering, $1.25
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  trillion. SpaceX was last valued around
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  350 billion in late 2024, hit roughly 50 billion after its
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  latest funding round. So that's for XAI.
• 1:15
  So where does that extra 850 billion come from?
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  Synergy. The corporate term is we all
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  love it. And I don't use that word
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  lightly because it's usually corporate nonsense BS.
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  But in this case there's a real argument.
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  SpaceX has Starlink, Starlink has millions of subscribers and
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  a constellation of over 6000 satellites beaming Internet to
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  Earth. XAI needs massive amounts of
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  computing power to train its models, and Musk has been very
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  vocal about the bottleneck being energy and infrastructure for AI
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  compute. Now here's where it gets really
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  interesting though. It's an infrastructure company,
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  and then infrastructure. The ground systems, the power
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  systems, the global reach. That's exactly what an AI
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  company needs to scale. So the timing here isn't random,
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  though we're in the middle of an AI arms race.
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  Open AI, Google, Anthropic, Meta for all, pouring billions of
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  dollars into compute infrastructure.
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  The constraint isn't really the algorithms anymore.
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  It's the physical stuff. It's the data centers, the
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  power, the chips. And Musk has been building
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  massive AI supercomputer in Memphis.
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  He's buying up all the NVIDIA GP OS by the 10s of thousands.
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  But he's been doing this through XAI as a separate company,
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  separate funding and separate investors.
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  But by merging these companies they consolidate the capital and
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  one set of investors. Just one thing and critically 1
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  strategic direction. SpaceX is cash flow from
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  Starlink and government contracts can now directly fund.
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  XA is infrastructure build out. XAI needed the money.
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  No more finding funding, no more shuffling money between
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  entities, no more competing for resources internally now.
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  So what does XAI do for SpaceX? That's what I keep coming back
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  to. What are they going to do?
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  How are they going to work together?
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  Autonomous systems is all I could figure out.
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  SpaceX already uses AI for landing rockets.
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  The Falcon 9 boosters that land themselves on drone ships?
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  That's a machine learning problem.
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  The Starship flight computer, same thing.
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  Now imagine the same team with access to XAIS foundational
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  models. You could have AI systems that
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  don't just follow pre programmed trajectories but actually reason
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  about unexpected situations. If you have an engine out during
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  ascent or the weather conditions change, AI figures out the
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  optimal response in real time. Super easy right?
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  Musk just put his rockets and his engineers in the same place
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  as his AI researchers. Everything just changed.
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  Now what if we thinking about Starlink plus Grok here?
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  Everybody has their opinion on Grok, right?
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  There's another angle that I think people are sleeping on.
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  Grok already integrates with X, the social media platform that
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  Elon owns. But what if it integrates with
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  Starlink? Think about it.
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  Starlink has direct to device capability.
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  Now your phone can connect to satellites without any special
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  hardware. And what if every Starlink
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  terminal, every connected device has a Grok built in?
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  Because of this, it's an AI assistant delivered from space.
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  Is that crazy or what? Musk has talked about building
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  and everything app? Of course.
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  That's what he wanted X to be, right?
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  A super app that combines social media, payments, AI ride hailing
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  connectivity. The merger gets him one step
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  closer. That's all there is to it.
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  The infrastructure layer is now unified.
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  And eventually maybe they'll get Tesla on board and bring all of
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  his companies, merge all of his companies together.
• 5:11
  Speaking about coming together, come join us.
• 5:14
  I've been digging through the analytics of the show.
• 5:16
  I've noticed that 37% of you are following this channel.
• 5:20
  And for you, I'm forever grateful.
• 5:22
  The other 63% of you, you've watched the show before.
• 5:26
  I've seen the stats, you've watched it, you've listened to
• 5:29
  it, you've been here before, or maybe you're new.
• 5:31
  If you're new here and you haven't hit the follower
• 5:33
  subscribe button, here's why you should.
• 5:37
  I've been doing this for about 10 years.
• 5:39
  I've been an independent journalist covering Elon tech,
• 5:41
  Space Flight, everything AI for the last 10 years, and I'll
• 5:45
  continue for the next 10. It's easy.
• 5:47
  All you need is one second. Just hit the follower subscribe
• 5:50
  button on whatever platform you're on right now, and I'll
• 5:54
  continue to do this for you. So thank you for that.
• 5:57
  I'm extremely grateful for you, and I'm blessed to have you in
• 6:00
  this community. So thank you.
• 6:02
  Now let's talk about what this means for everybody else.
• 6:07
  Amazon, Amazon, Amazon has been trying to get Project Kuiper off
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  the ground for years. They've launched some test
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  satellites, but they're way behind Star Lake in development.
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  Jeff Bezos also has Blue Origin, which is finally getting
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  competitive with New Glen. But Blue Origin and Amazon are
• 6:25
  separate companies, different investors.
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  They have different managers, different staff, different
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  timelines. Now must just show the vertical.
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  Vertical integration is superior.
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  You want to win in space? You want to win the race?
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  Neither. Rockets, satellites, ground
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  systems, the software, and apparently now the AI.
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  And Amazon might need to think hard about whether keeping these
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  companies separate makes sense anymore.
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  Google has invested in SpaceX for years.
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  They're an investor in Starlink, but they're also building their
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  own AI models that compete directly with XAI.
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  Puts them in an awkward position.
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  Now. Do you keep funding the
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  competitors infrastructure and the hardware and the software?
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  That's up to them. I I see a reason for it, but
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  they probably, they, they know better than us, right?
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  Let's talk about the money. That's what this all comes down
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  to, right? What does this mean for
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  investors? SpaceX has a massive list of
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  backer backers. Founders Fund, Sequoia, Google,
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  Fidelity, T Rowe Price. They're just, those are the
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  biggest names in venture capital and assets management.
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  They're all part of SpaceX in some way.
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  X AI has its own investor base. Some overlap, but not
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  completely. A merger means these investor
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  groups are now together. The cap table just got very
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  interesting. But here's the thing, at $1.25
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  trillion, who can even invest at this level?
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  This isn't just venture capital. You need sovereign wealth funds
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  now. National pension funds, the
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  biggest pools of money on our planet, have to go into this
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  thing, which is wild. Saudi Arabia's Public Investment
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  Fund has been looking for ways into the AI space.
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  Abu Dhabi, Singapore and Norway, they're all players who write
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  the checks that are this big must just create an asset that
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  appeals to the very top of that capital pyramid.
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  The very top at the top, at the top, all the people, they have
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  all the money. All the governments have the
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  money. Sovereign wealth funds.
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  There you go. So it's going to be interesting
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  how this works out, and I would be lying if I said I wasn't
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  thinking about antitrust here right now.
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  The FTC has been aggressive about tech mergers.
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  They've blocked a bunch of deals over the past few years.
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  But it's tricky. SpaceX and XAI aren't direct
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  competitors with anyone in a way that makes traditional antitrust
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  case sense. SpaceX competes with ula and
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  Blue Origin and Rocket Lab in launch.
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  Starlink Complete competes with traditional telecom.
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  XAI competes with open AI and Google and AI.
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  So there's no obvious market where this merger reduces
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  competition. If anything, it creates a more
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  formidable competitor in just multiple markets, not just one
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  place. The sheer size might attract
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  attention from regulators. When one person controls a $1.25
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  trillion entity with national security implications, rockets
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  that launched spy satellites, and AI systems that could be
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  used for who knows what. Regulators tend to pay attention
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  to that kind of stuff. I don't think it's blocked
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  though, but it wouldn't be surprised if there are
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  conditions attached. Maybe data handling requirements
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  for Starlink, maybe restrictions on what AI models can be
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  deployed on government missions, something that gives regulators
• 10:01
  a way to claim over a site. Now let's talk about what's
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  different. You know, I've studied Elon and
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  his companies for years. We haven't seen anything like
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  this before. He's built single companies,
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  SpaceX, Tesla X, etcetera, and they've all been kind of his
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  thing, right? Tesla went public, SpaceX state
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  Private X was an acquisition, XAI was a new startup.
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  The Boring Company and Neurolink are basically just kind of side
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  hustles for Elon right now. That's the first time that Elon
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  has combined two of his major companies into a single entity.
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  Suggests he's thinking about his empire differently now, less
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  like a portfolio of bets and more like a vertical integrated
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  system. I think he's going to do Tesla
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  in the next year or so if I mean, he has to get everybody on
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  board, right? He has to get everybody at Tesla
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  on board to do this because that would be a huge merger.
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  Merge everything together, SpaceX, Tesla, XAIX, everything,
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  put that all together in the mega Corp, right?
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  The question is whether this is the first move or the last.
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  And since it's XAI and they use Crock, does X get folded in?
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  Does Tesla somehow connect all this with the robots and
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  optimists? Musk has always talked about his
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  company's server serving like a larger mission, human survival.
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  He wants to send people to Mars so humanity can continue on
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  forever. But maybe this is him actually
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  building the structure to pursue that.
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  I mean, maybe he's, maybe he's building the machine that will
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  build a machine that'll get us to Mars eventually.
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  Maybe this is him actually doing one company.
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  Finally, the one vision. You know how we wanted to like
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  the X company, a trillion dollars to make it happen.
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  They need all the money, right? But there's also things that we
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  don't know. There's a lot that we don't know
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  actually. What's the governance structure?
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  Who runs the combined company? What happens to the existing
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  executive teams? We don't know the exact deal
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  mechanics. And is this a merger of equals?
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  Is 1 company acquiring the other or are there new shares being
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  issued? Are these people going to be
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  deluded? You know, the SpaceX people or
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  the XAI investors? Nobody knows and we don't know
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  how employees feel about this. SpaceX has a distinct culture.
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  Move fast. Engineer the hell out of things,
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  launch rockets, get to Mars. Damn it.
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  XAI has been more of kind of like a research lab, building
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  foundational models, competing with open AI, intellectually
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  grok, etcetera. Cultures might clash, or they
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  might energize each other. They might realize that they
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  need AI to get them to Mars, so that might be a thing.
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  So Musk now controls a company that's $1.25 trillion.
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  You can launch rockets to Mars eventually and build AI systems
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  that might eventually think better than humans, Optimus.
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  Whether that is exciting or terrifying, that's up to you.
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  Depends on how you feel about Elon and how he could control
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  everything. Because he could control the
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  skies at this point, right? If he has AI and Starship
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  working together with Starlink and Grok on every phone that has
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  Starlink, he's controlling a lot of stuff at that point.
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  But it's a huge scale. It's undeniable.
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  This isn't a startup. SpaceX isn't just that little
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  company in the dirt lot at the, you know, at the end of Star
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  Base in Texas anymore. It's an institution.
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  It's mature for better, for worse.
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  These kind of institutions shape the future.
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  Now, if you've been here this whole time, I want to say thank
• 14:09
  you for participating and being part of this.
• 14:12
  So please take a second hit the subscribe button, leave a
• 14:15
  comment down below. Let me know what you think about
• 14:18
  all the stuff. Are you scared or I don't know?
• 14:22
  Are you energized? Are you excited about this?
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  Because there's some part of me that's thinking like oh AI more
• 14:31
  AI in SpaceX stuff. It might be pretty cool.
• 14:35
  I don't know, it's, it's a little bit of both.
• 14:38
  So let me know what you think of the comments.
• 14:39
  All right, take Care now.