* Egg of Columbus: https://en.wikipedia.org/wiki/Egg_of_Columbus
Many seem to also be doing this with androids around the time he started talking about them, hence how we can buy them and put them to work even though Optimus still hasn't launched yet.
The concern is ~80% that a brand new stock enters the market & immediately has to be bought by everyone. The market has no time to adjust & settle.
This is fleecing everyone & it's entirely unclear under what madness this would ever have been considered.
There's so many irregularities and abnormalities being considered here, and all of them seem like pretty straightforward safeguards. It feels like nothing short of a conspiracy that so many norms would be pushed aside to consider listing spacex so quickly in so many indexes. "The proposal could also remove the minimum Investable Weight Factor requirement for megacap companies." For fuck sake! https://x.com/Benzinga/status/2050244492335206911
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.
Yes please!
I learned just how bad of a deal Social Security is when an employer (a bootstrapped startup) offered a predatory 401k plan. It was free for my employer to setup but the employees were stuck with extremely high fees. It was so bad that John Oliver made an episode[0] about it!
Yet, even for the worst 401K plan in America, the projected retirement returns were 1600% of the Social Security returns. Even America's worst 401K would be better for the average consumer than the federal debacle
Uncle Sam should sunset SSI and allow citizens to select from and move freely between a number of accredited funds.
SSI covers disability, and supplements income no matter what happens. Disability? You're covered. Live to 105? You're covered. Market dips 50% in a period you have a lot of expenses? Your benefits are unaffected.
Tax advantaged 401k is already the vehicle of choice for retirement funds.
1600% higher return is great when you work from yours 20s to your 50s/60s and can essentially self insure yourself at that point with it, but as the person you are responding to you is (I believe) trying to say, that's not everyone.
If it was a flat tax where everyone paid the same percentage of instead of a regressive tax where only working people pay the rate, then social security would be well funded.
Obviously they don’t want to pay the same tax rate as working people, so theyd rather get rid of social security instead.
https://www.ssa.gov/oact/cola/bendpoints.html
But every dollar of income earned over the SS wage cap reduces effective tax rate. The more you earn, the less the effective Social Security tax rate is for you. At Elon Musk levels, it rounds down to zero. Therefore, there would be no motivation for super rich people to get rid of social security.
The only material reduction in tax rate would be for those relying on annual earned income of a few hundred thousand dollars or less (i.e. the bottom 95% of income earners).
Mathematically, there is no alternative to the purchasing power of my Social Security benefits being reduced, simply due to the changes in the population age histogram.
It has to become more and more of a wealth transfer from the working to non working, which means my kids will benefit less and less from their work.
You definitely can't do it with the government either...
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?)
Scientific organizations like NASA would jump on a Mars Starship in a heartbeat, but how many missions will they want?
SpaceX is a corporation first and foremost, not a research org.
> 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.
https://www.reuters.com/sustainability/boards-policy-regulat...
Do explain to me his evil plan of becoming rich by lying about going to Mars and yet agreeing to only get paid when he does go to Mars.
The Antarctica population peaks at about 5,000, which is a paradise compared to Mars, with drinkable water and breathable air. It even has naturally occurring food! You can get there with a mere boat!
One million people on Mars within our lifetimes is a total fantasy. Like the Nigerian Prince emails, its main purpose is to identify marks.
I may be overly-generous to the guy (bad habit, billionaires don't need or benefit from best-faith interpretations of the stuff they do, leads to sycophancy), but I think this may be more like grandiose delusion than a 419 scam.
The continual promises of full-self-driving, however, those definitely seem like a 419: up-front fees for promises never delivered on, repeated again with newer better hardware. What version is the hardware on now?
He already owns hundreds of billions of dollars worth of SpaceX. He "gets paid" whether or not these goals are achieved (a million people on mars definitely won't be achieved this century, as the place is fucking awful; one thousand is vanishingly unlikely, one million is flat-out not happening). In fact, hyping the company up ahead of IPO gets him paid, to the tune of thousands of working people's lifetime earnings.
Mars could make for an interesting prison, though. Like the Australia of two centuries ago. If nobody volunteers to live there I wouldn't put it past Musk to meet his target that way.
Nobody is spending trillions to build a prison on another planet.
But it isn’t like he lied about full self driving for over a decade and then recently admitted none of his cars that people bought for that promise will be able to do that or anything…
The rest of his compensation isn't tied to that, but is tied to the bubble and hype that the lie of Mars living helps prop up.
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.
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.
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.)
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
They are living under a feudal system
Any one of the 13,000 could be fired on whim of Musk and even if it was in error they would have months if ever to get restitution. The employees describe him as a “tyrant” that fires people based on ego
The fact that people aren’t dying of scurvy is all you’re pointing to?
https://www.businessinsider.com/tesla-employee-survey-elon-m...
This is just wrong
Have you not been paying attention to the last five years of layoffs and a decimated technology labor market?
that’s undeniable
Starlink would not exist if the government did not prop up the whole thing in the beginning
This is precisely how the Commons get privatized and your ignorance around this topic is unbelievable
Unreal how simplistic you people are
The guy who landed on the Moon testified in congress opposing giving SpaceX any money.
The government wanted nothing to do with SpaceX.
SpaceX won the contracts despite the government, not because. They won the contracts because they offered the best product at the lowest price.
This is literally how government contracts work on massive multibillion dollar systems.
Palantir famously did this with the Army: https://www.defensenews.com/land/2019/03/29/palantir-who-suc...
Every gov-tech company on the planet has a team of people hired and dedicated to suing the government via a well understood process that is intended to filter out organizations that do not have the financial capacity to deal with the government.
As an AF SES I owned $300 million worth of contracts for the Air Force starting in 2020 and by 2022 my acquisition portfolio for AFLMC was $6B yearly. Guess how many of those contracts had actual competition despite months of solicitation? Almost none because the FAR is written/updated by corporations such that the barriers to entry are impossible to meet.
Go tell me how quickly you can get a piece of software running on a govt network and come back to me and tell me that there’s equal competition.
You have no idea how much corruption is baked into the structure of government contracts.
The corruption is not that someone violated the acquisition system; the corruption is that the acquisition system legally converts concentrated contractor influence into unequal access, unequal rule-shaping power, and unequal probability of award.
There are no non-corrupt government contractors if for no other reason then the government contracting market is not a open and free market it is regulated specifically by the federal acquisitions regulation which was in large part written and consistently adjusted by non-elected corporate leaders: https://www.jacksonlewis.com/insights/dod-seeks-contractors-...
Read war is a racket and it will be clear: https://archive.org/details/WarIsARacket
It’s enough to show that they’re wrong - and if you guess wrong that they are lying, and they were just wrong in good faith, you’re much more likely to convince them (and others).
And, from the HN guidelines:
Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes.
…
Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.
That is to say that the hallmark of a feudal society is one with very, very weak central authority and powerful local authorities, mediated by the personal interrelationships within and across different levels of authority. Apply that to your analysis of SpaceX and the mismatch is clear. In your analysis, SpaceX is an entity that is utterly dependent on the government for its existence, and need to invest a large amount of energy in acquiring the beneficence of said government. That's not the behavior associated with a feudal society but rather the absolutist monarchies that replaced them, pretty much the antithesis of a feudal society.
This is precisely the state of affairs in the United States today. Where people get confused is that the idea of property being specific hectares of land rather than what property is at maximum is capitalism which is simply paper contracts and debt, per graeber
> In your analysis, SpaceX is an entity that is utterly dependent on the government for its existence, and need to invest a large amount of energy in acquiring the beneficence of said government. That's not the behavior associated with a feudal society
It is the behavior of a Lord.
The United States is not an absolute monarchy and it has a rotating set of governors
What doesn’t rotate are the capitalist leaders (investors) for the top 100 corporations and they are the actual governors of this society
Because they determine where capital flows they are the ones who you have to pay homage to in order to get property so that you can then become a Lord
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.
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.
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.)
Fidelity offers one: https://www.fidelity.com/managed-accounts/separately-managed...
It'd probably take you an afternoon worth of time to research then enact it.
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.
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.
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.
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).
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.
They only allowed them again in the 80s as part of the larger wave of "let's stop regulating capital".
Presumably, the market will price in the risks of super voting shares.
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.
They make money by curating an index i.e. a list of companies and licensing that list to other companies for a fee.
If they pick good, profitable companies with great future, then the business continues. If not, the business fails.
So when you're debating "should/shouldn't", the only perspective is that of Nasdaq, the company, and they only question they "should" be interested in is: is SpaceX a good company with great feature that will make the list better.
The 6 month rule was created by Nasdaq, the company, in order to pick good companies. It's not a religion. It's not a suicide pact.
Therefore when faced with historic IPO (the largest IPO ever) it's a sign of good management that they are not applying the same rules to SpaceX (debuting at $1.75 Trillion) as they do to companies that IPO at $100 million.
Option 2: the market has control, and optimizes for short term starlink revenue and the launch business.
I prefer Option 1.
Option 4: Elon takes over a social network and tries to Orbanize the West with it.
They can't really tie the cuts to actually useful programs. That was a big reason for the cuts.
Every article concerning Musk or his companies needs to forever be prefaced with this fact.
(It does raise questions about how Elon might manage the food supply to Mars, if that ever happened)
Indeed.
One of the various things which made me down-rate my estimation for Musk's competence was him suggesting someone may want to run the first pizza restaurant on Mars. Like, sure, someone will, but this is so far down the chain of necessary tech it's like me personally pontificating about what I'll do when I'm as rich as Musk is today: If he's thinking about pizza restaurants, one has to ask if anyone's bothered with figuring out how to clean the perchlorates from the soil to get the minerals needed to fertilise the wheat to make the dough for the pizza.
I've yet to see any sign SpaceX have even built a machine for doing the Sabatier process on Mars, which itself is a prerequisite for anything like a Starship-based Mars colony even getting started, though at least Musk has gotten as far as talking about it.
Don't ask the public for money and then not provide any of the corporate requirements under the SEC for the proper operation of the markets.
You can't have both.
As a rule, investors optimize for long term growth since that's what maximizes valuations. All the megacap companies are judged by future growth.
The effect is companies tend to exaggerate and lie about what they can achieve in the long term to juice their own stock. Elon's def got the juice.
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.
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.