Depending on where you sit, SpaceX is either the greatest industrial company of our time, or a CapEx bonfire that requires a lot of imagination to justify.
But either way, the company’s public debut tells us something important about this investment moment: the next technology cycle is not asset-light. It is ambitiously physical.
SpaceX is now much more than rockets and launchpads. With xAI inside the company, SpaceX is pitching itself as an AI company, an emerging hyperscaler, a satellite broadband network, and eventually a vertically integrated chip manufacturer, solar manufacturer, power developer, and operator of orbital data centers.
In this episode, we tackle some of the energy storylines behind SpaceX’s public debut.
We’ll ask what it means for Elon’s energy master plan, the pathway for powering terawatt-scale compute, and whether it presents an opening for other hard tech energy companies coming out of Elon’s orbit.
Credits: Co-hosted by Stephen Lacey, Jigar Shah, and Caroline Golin. Produced and edited by Stephen Lacey, Sean Marquand, and Anne Bailey. This episode was mixed by Matthew Filler.
Open Circuit is brought to you by FlexGen, a leader in integrated battery energy storage solutions and energy management software. FlexGen helps owners and operators gain greater visibility and control across complex energy systems to maximize performance. Learn more at www.flexgen.com.
Transcript
Stephen Lacey: From Latitude Media, this is Open Circuit. Depending on where you sit, SpaceX is either the greatest industrial company of our time finally going public or a CapEx bonfire that requires ketamine to make the financials work. Whatever your perspective, it does tell us something about the growing investor appetite for companies that are ambitiously physical.
And SpaceX is asset heavy almost to the point of absurdity. Rockets, launchpads, robots, satellites, data centers, chip ambitions, batteries, turbines, solar manufacturing, and eventually compute in space. This week we’re going to tackle some of the energy storylines behind SpaceX’s public debut. We’ll ask, what does it mean for Elon’s Energy Master Plan? The pathway for powering terawatt scale compute. And the opening for other hard tech energy companies, many of which have come out of Elon’s orbit. The energy contrails from SpaceX’s takeoff are coming right up.
Hello everybody. Welcome to the show. I am Stephen Lacey. I’m the executive editor of Latitude Media. Caroline Golin is the chief growth and policy officer at NRG. Hiya, how are you?
Caroline Golin: I’m great. I’m great. I’m very happy it’s summer. I don’t know about other parents, but I love summer. I love not worrying about a certain bedtime. I love the kids are somewhat lazy and around the house. I love summer. So I’m very happy.
Stephen Lacey: Did you read SpaceX’s S1 on the beach?
Caroline Golin: No. No. That’s definite no.
Stephen Lacey: Jigar Shah is the co-managing partner at Multiplier. How are you?
Jigar Shah: I’m great. I agree with Caroline. I love the summer and I loved all of your puns and your intro that had to relate to space and it was great. I thought it was well put together.
Stephen Lacey: What are you doing in Detroit right now? You’re not in your usual spot.
Jigar Shah: We have this reindustrialized conference where it started really with defense tech to figure out how we manufacture more defense tech here in the United States. And this year it’s really been dominated by energy and the data center supply chain. So it’s been really great to meet everybody.
Stephen Lacey: I’ll be curious to hear if there’s a lot of SpaceX chatter coming out of that event. I’m assuming there will be.
Jigar Shah: I’m sure.
Stephen Lacey: Yeah. Well, let’s talk about the biggest business story on the planet right now and maybe on other planets at some point and that is SpaceX. If you’ve been following us over the years, we’ve had tons of conversations about Elon Musk and Tesla, solar batteries, manufacturing, the master plan, the many side quests, but we haven’t really had a chance or a reason to talk about SpaceX on the show until now.
Because in the lead up to this IPO last Friday, SpaceX became something much more than a rocket company. With xAI inside SpaceX, it is obviously an AI company. It’s an up and coming hyperscaler. It’s a satellite broadband network. And if you believe the S1, eventually a vertically integrated chip manufacturer, solar manufacturer, power developer, and operator of orbital data centers. So sure, this is a space story. It’s obviously an Elon story, it’s a public markets story.
And for our purposes, it’s also an energy infrastructure story. Let’s just start with the overall narrative. I’m just curious for your takes that this S1 was very long and it caught a lot of flack for being what some would say absurdly ambitious and not attached to the actual performance of the company. Jigar, what was your reaction as you read through it?
Jigar Shah: Well, I mean, I think that you start with the fact that SpaceX exists today because of a public private partnership where NASA saved them in 2009, 10, 11, right? By giving them a billion dollar contract when they were about to go bankrupt, right? And so I think it’s important to note that in the S1, I think it really talks about the fact that SpaceX has taken that investment from the public and turned it into a remarkable story, right? I mean, we used to be at, I don’t know, $80,000 a kilogram or something to get stuff into space. We’re now at less than $2,000 a kilogram to get stuff into space and maybe headed towards a few hundred dollars per kilogram if Starship works. And so that has allowed Starlink to exist.
It allows for people to think about data centers in space. It allows for people to think about robots being placed on the moon to start terraforming the moon and building a base there. All of these things are all basically predicated, I think, on the fact that they have reduced launch costs by so much that today more satellites have been deployed into space by SpaceX than every single launch by everybody else combined. I just think that’s truly extraordinary to behold while recognizing that the actual financials don’t support a $1.75 trillion valuation, but I think the wow factor of what they’ve actually accomplished is breathtaking.
Stephen Lacey: I seem to remember that there’s another company that benefited from government involvement when it almost failed. What was that again? Oh yeah, Tesla and the Department of Energy.
Jigar Shah: I mean, Elon’s very good at the public-private partnership, even though he forgets about the public afterwards. But no, the Loan Programs Office obviously put that loan in place. But I think to the Tesla story, I do think they delivered a lot after their IPO, right? I mean, they-
Caroline Golin: And I think they paid back that loan with interest. Yeah,
Jigar Shah: They did. They paid back the loan with interest. No, for sure. And I think they paid back the grants with interest and NASA is very happy with what SpaceX has accomplished. But I do think that the Tesla Master Plan three, which came out I think in 2022 or 2023.
Stephen Lacey: 2023
Jigar Shah: Has failed to meet its requirements. I mean, they’re not on track to 20 million EVs per year being manufactured. And so part of the story here is that if you believe that SpaceX is the lowest cost provider of launch and the lowest cost provider at some point of internet and all these other things, then you can imagine subscriber growth being very large, all that stuff and them earning their valuation. So I mean, all in all, I mean, I’m still in awe of what SpaceX has accomplished.
Stephen Lacey: Okay. So Caroline, what was your initial reaction to the S1? What storylines popped out to you?
Caroline Golin: So I sort of see this a bit more at the 50,000 foot view because I can’t personally keep track of each individual Elon endeavor because there’s so many of them. But if you got to look from a geopolitical perspective, I think the West is searching for a counter hope to China and I don’t think the West believes that the US as a nation state or even from a philosophical perspective is going to take the same approach of the publicly owned integration upstream on supply chain, critical minerals, choke points approach that China has taken. So I actually take this from a different perspective, which is that on the one side of the future global domination, you have China, which is saying we own all the critical minerals and now we are increasingly putting choke points on midstream manufacturing for things that really matter like solar cells.
And on the other side, you have the US, which largely divested in all of its industrial manufacturing and anything that would critically matter in this next digital transformation outside of maybe chips, right? And so what I see the valuation around SpaceX being a narrative for is the West is putting their money in a corporation and their hopes and dreams in a corporation as being that challenge and that corporation is going to go toe to toe with the Chinese empire and it’s a long game and they see it as a long game. I think a lot of the investors, largest investors in this IPO probably will not see much of the returns, but they’re playing a longer game around critical minerals, around a supply chain, around owning the vertical integration and production of what we think the next version of human society is going to look like and underscoring all of this is just an accepted belief that if we want to keep consuming at the pace we’re consuming and if we want to transition to the digital AI economy at the pace we, I guess collectively have decided we want to transition into, that we’re going to run out of feedstock in this world.
And so they’re betting on the fact that they need to go find it someplace else. Commercially, it makes no sense, right? I mean, I think it wouldn’t be commercially scalable to see critical minerals outside of the planet earth for a very, very long time, but that’s sort of the narrative that everyone has bought into and I think investors are feeding it.
Stephen Lacey: Yeah. And I think you’ve hit on the central tension here when talking about the company or evaluating the company. You have folks that are purely focused on the financials of SpaceX and it’s losing money hand over fist. And you know, you’ve got Michael Burry, the investor who was made famous by the Big Short, saying that nothing in that S1 suggests that the company’s worth $1 trillion, let alone $2 trillion. Others have called it a train wreck. It’s based on this absurdly high total addressable market that assumes infinite compute that will set the foundation for its AI business, a business that is currently losing a ton of money and not growing nearly as fast as some of the other frontier AI companies. And the question in my mind is, clearly we’ve turned a corner and investors are really interested in funding heavy infrastructure companies, hard tech infrastructure companies because of geopolitical concerns as you identified, supply chain chaos AI has made physical bottlenecks impossible to ignore, but the question in my mind is whether that outweighs the normal investor concerns that we see with public companies about CapEx, execution risk, governance, losses.
I think that is the inherent tension that is driving the story right now. And if anything, Elon is a master storyteller. And so the question in my mind is like, what wins out in the tension between those two things? Jigar, what do you think?
Jigar Shah: Well, I mean for a very long time there have been huge shorts against Tesla and I don’t think any of them have won. I think when you think about sort of the GameStop movie around like Reddit investors versus hedge funds, right? The Reddit investors won and GameStop still exists today, right? So I mean that dynamic I think is something Elon is quite good at and I think people short Elon stocks at their peril because you think that logically there’s going to be a reset valuation and then six years later there isn’t one, right? So I mean, I don’t know that there’s going to be any major correction happening anytime soon. I think the big question really is around does Elon continue to use this currency to push the barriers of the frontier, right? Do we continue to move forward on like all the things that he wants to move forward on?
Like orbital solar, I don’t know, I probably would have discounted that like a lot, but it’s very-
Caroline Golin: You did discount it in a previous episode. Not too long ago. Just so you know.
Jigar Shah: Right. But I mean, but it’s directly proportional to launch costs, right? And if launch costs go down that orbital solar might work. Now you still have to deal with micro way versus infrared ways of like getting the energy back down to earth, but maybe it’s possible, right? I mean, my sense is that they’re going to have the money now to be able to test it. And if you look at SpaceX history, I mean they’ve burned up a lot of rockets doing rapid testing to be able to get to where they are today where now they have reusable rockets in a way that NASA could never take that kind of risk and neither could like Lockheed and Boeing, right? So when you think about how aggressive they are around collecting data, around trying things that fail, et cetera, my sense is that the world is a better place if they continue to take a lot of risk and continue to push things on the edge.
I still don’t know how you square that with the valuation of the company, but I think there’s a lot of people particularly on Reddit and retail investors who get a lot of juice from the fact that they’re using this money to push the frontiers.
Caroline Golin: For sure. I think the story that Elon has projected is that there is no date that challenges the future state, right? And so if he misses a fourth quarter, the future state is still possible and that’s what he’s selling. Whereas for more traditional investors, when there is a competitor in the market, it’s a question of trading on that margin because the competitor is going to, their EBITDA is going to look better, whatever, cashflow’s going to look better. What he has sold is that there is no competitor to me but China, right? And so there is no not getting to that number. We will get there. I think the interim milestone goals that he said are somewhat arbitrary and maybe to Jigar’s point, more about pushing the overall industry, there’s a fear factor in that and competitiveness across things like AI, like EVs, like critical minerals, batteries, solar, everything.
But I actually, I think he’s just operating on a very, very, very different rule base, which is that what he is selling is a future that cannot be tied to a quarter earnings.
Jigar Shah: No, I mean, and I also think that he’s giving everybody permission to opt into that vision.
Caroline Golin: To that vision, exactly. Yeah.
Jigar Shah: Yeah. I mean, all of the investment banks have opted into the vision. He very smartly made sure that every single investment bank was on the book so that every one of them got a piece of the IPO proceeds and every one of them had to force their analyst to say nice things about the stock, right? So he knows how to play the game, but I think he also gave people permission to fund competitors, right? There’s three or four competitors to him and SpaceX around launch costs and all those guys are now getting money, right? There’s competitors around space data centers and now they’re getting money. There’s competitors around orbital solar and now they’re getting money, right? I mean, I think that there’s a lot of people that are taking this new permission structure and using it to go public and raise capital and dream big dreams.
I don’t think that’s a bad thing. I think that I can hold both thoughts in my head, which is on this side, I like the fact that companies are dreaming big and not boring me with quarterly earnings and I like the fact that like all of these resources are being poured into these industries of the future, which I think are going to be necessary to fight climate change and all the other things that I care about and like I personally probably don’t think that Warren Buffet is going to invest in these companies.
Stephen Lacey: Well, okay, this permission structure is really important and this is what I want to get to. How does this investor appetite and this permission structure change the way companies are funded in the industry we often talk about in clean energy and sustainable infrastructure. You’ve got a bunch of Starlink former employees who’ve started some really interesting companies across-
Caroline Golin: And Tesla former employees.
Stephen Lacey: Yeah, totally. And lots of the huge diaspora out of Tesla and SpaceX. SpaceX in particular, you’ve got like portable nuclear reactors, you’ve got deep sea volcanic power systems, you’ve got more conventional solar and lithium-ion battery storage development companies. I think some that are doing carbon capture using rocket tech principles. So it’s a really interesting moment for companies that have been influenced by SpaceX, but the question is like, will this increase investor appetite for this class of company or is this enthusiasm singular to Elon Musk?
Jigar Shah: I think it already has, right? I mean, I’m at this re-industrialized conference in Detroit and all of the VCs are here and all of them want to invest in hard tech and they’re starting to see real returns from the Fervo IPO, from the SpaceX IPO, from other IPOs that have gone forward that they had some stake in. Now of the 90 plus VCs that invest in climate tech, my sense is half were not in the right names and they will go out of business because they won’t be able to raise their next fund, but the other half were in the right names and as a result, they got this positive feedback loop by which to be able to raise their next round of funding, right? I mean, I do think that this has led to a lot of financing and then you’ve got diversification of expertise, right?
So there’s some VCs that have sort of turned themselves into growth equity and/or private equity even like Ara Partners is almost private equity, right? Where they come in and say to hard tech companies, “We’ll take a controlling interest in you, but we’ll also help you build your first manufacturing plant. We’ll help you with the first of a kind financing. We’ll do all of that hard stuff for you so you can be a technologist.” I think the ecosystem is being fed very much, right? I mean, I think all of that is true, but I also think that a lot of these people are doing this not because they believe in climate change, but because they just believe in making money or in doing hard things or competition with China or national security or whatever it is that floats their boat. I mean, I do think that the technologies ultimately all lead to the same place because I don’t think our savior is going to be coal here.
Caroline Golin: Yeah. Well, I was talking about this with my eldest son over the weekend a little bit. When I was graduating high school or in college, I remember hearing over and over again that the smartest mathematicians in the country were going to Silicon Valley to create apps to addict people, right? That that’s where our greatest minds were going. They weren’t even going to Wall Street anymore, which may have explained some of the derivative crisis we had, but they were going to build candy crush or et cetera, et cetera, right? And there was this real sense of like patheticism, if that’s the word, about where we were incentivizing our brain trust. What I think is really positive about this AI movement is that, and what Elon is doing as well, is that it’s redirecting our greatest minds towards actual physical production of value. What I think is dangerous, of course, is that if you look at the global economy, the scale is completely weighted by a handful of companies, right?
And so if you are not tied to the ambition of a handful of those companies, whether you’re in energy or labor or design or marketing or name an industry, I mean, even agriculture, because we’re talking about land and land development as well, like if you’re not tied to this in some way, you have been depreciated in your value. That creates a short term huge opportunity for companies in our sector because no one ever cared about solving the energy crisis. And I’m not sure that everyone still cares about solving the grid transition opportunity. What they care about is riding the coattails of this massive economic transition with AI and by doing so rising tides lift all ships, I guess. And there will be winners out of this. I mean, there will be massive scientific breakthrough on the electricity side because of this AI demand, but it’s because it’s being pulled along in the same net, not because as an economy we decided we really should fix this.
Stephen Lacey: So you’re basically … When you’re talking about the few companies that are driving this, are you mainly talking about hyperscalers or?
Caroline Golin: Yeah. I mean, well, Nvidia, Google, AWS, Oracle.
Jigar Shah: Exactly. Don’t forget our good friends.
Caroline Golin: The actors that we are always, always talking about. I mean, when you all had the Energy Gang podcast a decade ago, you weren’t talking about Google. I remember calling Katherine Hamilton and being like, “Should I take this job at Google? Why does Google care about energy and utility partnerships and scaling this stuff?” And now Google will set the tone and make or break companies based on whether or not they do an LOI and then maybe a PPA that has like very little teeth. The coattails are going to bring a ton of good. Yeah, I agree with that. It will end at some point.
Jigar Shah: I doubt it’ll end, but-
Caroline Golin: Oh, it’ll end. It’ll end. All six companies will not succeed.
Jigar Shah: I hear you.
Caroline Golin: There will be a reckoning, in my southern way.
Jigar Shah: But I think that in general, Google and others have it upside down, right? They’re not actually in control. It’s the people who are doing big things that are in control, right? They’re downstream takers of this stuff. When you think about-
Caroline Golin: I would argue Google thinks it’s a big thinker.
Jigar Shah: No, what I’m saying is that Google’s not signing these contracts because they have a choice. They’re signing these contracts because they don’t have a choice, right?
Caroline Golin: They desperately need this capacity. Google is signing these contracts because they are using their platform to do some good with this chaos. I don’t think that they have to do what they are doing because many of their competitors in the space are not. However, whether they’re big thinkers, I mean, I’m not there anymore, so I don’t know. No, look,
Jigar Shah: I mean, I’m a big fan of the people at Google. I’m not trying to put them down. I’m just saying that when you look at what xAI did to become the number four hyperscaler in the country, they broke all sorts of rules and all sorts of norms. They’re making a lot of money on selling the capacity to Anthropic and Google, but those contracts have a 90 day out clause and I do think that because xAI has not done the best practices that Google’s doing, they are going to have a hard time building new data centers in the future. I think you’re already seeing a whole bunch of governors and others basically banning people like xAI from their states because it is a political issue, right? So I mean, you can say that Google did this out of the goodness of their heart, but I think they did it because their social contract demands them to do these things that are forward leaning, otherwise I think they might lose their social contract.
And I think all of these companies that are working their asses off to make this happen, whether it’s the Fervos of the world or Quaise or others on the geothermal side, or whether it’s the Kairos’ of the world, on the nuclear side, et cetera, are doing all of us a huge favor, right? Because they probably could get paid 10 times more working in AI to your point earlier, Caroline, And they’re working instead in these areas that are solving really tough problems.
Caroline Golin: I wish that the social contract was more about communities not the communities demanding clean energy alongside these data centers. That is not where the social contract is being broken. The social contract is being broken because of water, because of noise, because of air pollution from diesel gen, which I guess you could argue is a clean energy thing, and frankly, because they don’t believe in this future. So I think that social contract is a very different thing and it doesn’t matter how many clean energy deals Google signs. If those issues don’t get accounted for, it doesn’t matter. But going back to what we said before is, I actually remember this conversation within Google. So xAI had come on the scene. They were very new to the hyperscaler round table conversation that we would have with governors and LPO and federal government and like. And one of the very, very, very, very senior leaders in Google asked me, “Why are they going faster than us?” And I said, “Because Elon runs all of his businesses as if they are going out of business at the end of the month.
It doesn’t matter how profitable they are or are not, which I think we’ve established that clearly they’re not playing by those rules. Every single person in his company believes that they will lose their job at the end of the month if they don’t hit certain milestones. None of the other hyperscalers run their companies that way and they never had to. And that is the reason why they’ve been able to emerge. There are a lot of going back to supply chain and contracts and all that stuff, but it is a mindset that he has instilled. It’s a fear-based mindset. In your most positive life, you can say it’s an opportunistic based mindset, but at Google, no one believed that Google was going under if that data center was on quarter off. Everyone at xAI believed it and that’s why they just outworked the rest of the industry. And I thoroughly believe that’s why they emerged the way they did.
Stephen Lacey: Well, you’re touching on something that is really important here and that is xAI is putting a lot on its … Excuse me, SpaceX is putting a lot on its AI business for growth, right? Investors are very excited about it. They become, I think, the number four hyperscaler is what you said, Jigar. They’ve run up the ranks very quickly. Google’s signing compute contracts, anthropics signing compute contracts. But as we’ve established, their model is one of the worst, if not the worst in the industry. They go in, they don’t care. Especially by Elon, they don’t care. They put in unpermitted turbines. They do it in the dark of night, so to speak, without any community input. We’ve sort of baked that in. Everybody’s cheering on the fact that SpaceX is going to have one of the fastest growing data center businesses, but this is the exact model that is going to cause problems.
Yes, it could cause constraints for the company. I think that’s a serious risk. They outline some of those risks in the S1. It’s also one of the reasons why they want to go to space. But that worries me, the fact that everyone’s cheering on this growth and SpaceX or XAI is one of the worst actors in the business. I think that’s problematic.
Caroline Golin: Yeah. It’s huge and it’s existential for the entire industry. So like I said, it doesn’t really matter what bar Google holds itself to or Microsoft holds itself to. If this is going on, it’s going to be a race to the bottom. And the political pushback, and I think I’ve said this on the pod before, but the only thing that’s uniting the right and the left in this country right now is data center moratoriums. So it’s not a non-variable. I assume there is some arrogance mixed with some type of political plan for Elon, but the rest of them, I’m not sure Abbot. I think it’s more dear in the headlights than anything.
Jigar Shah: I was in New York City meeting with all the top investment banks the day before the SpaceX IPO. All of them had said to me that Gwynne’s the CEO of SpaceX has been telling everybody that the one division that is not staffed with the same quality people that she’s used to staffing with is XAI. And so she was very open and honest with all of the institutional investors on that.
Caroline Golin: That tracks with my meetings.
Jigar Shah: And that she was going to fix it, that she was going to get them the high quality talent required to be able to be better.
Caroline Golin: Yeah. I remember at one meeting, some gentleman said something. I pushed a little bit, asked a clarifying question, and his response was, “Well, if you don’t follow me on X, you clearly don’t know what’s up.” And I thought, okay, here we go. Here’s the new decorum. But yeah, I think that’s probably right.
Stephen Lacey: Jigar, you hinted at the Tesla master plan in the beginning of the episode and it feels like we are moving beyond this sustainability thesis that has guided Tesla’s master plans over the years to this practical reality that we’re in this transition to energy and compute abundance at any cost. So do you think that Elon is sort of giving up his master plan ambitions, which have been about largely sort of creating a sustainable energy system that gets the world off of fossil fuels to something that looks just more like aggressive fast build out of private power, gas, turbines, batteries at all costs. What do you think?
Jigar Shah: Well, remember, I mean, Elon is a person who is defined by his lack of empathy, right? And so the notion that he cared about this at all in the past was like, I mean, it was always a means to an end, right? I mean, the reason why he believes in electric vehicles and in solar power is not because of climate change, although it was a great frame, it’s because it is very plainly obvious to anyone who looks at it that coal, natural gas and fossil fuels cannot grow except linearly.
There is actually no exponential way to grow those fuels, right? So if you believe that the world is going to be using 10x more BTUs by 2100, right the only way to do it is through solar or nuclear power or things that happen to be green or clean, right? It’s not something that is for him to abandon, right? It’s not like he’s saying, “We’re going to do this this way or that way.” This is why I’ve argued on this podcast multiple times that I’m not afraid of the fact that they’re building a lot of natural gas power plants because that’s capacity, right? But in no way is it going to be cost effective to build all of these natural gas pipelines, to keep all of these folks running twenty four seven, right? I mean, like when you ask people, “Can you get firm gas capacity?” They’re like, “No, it’s a seven year process to get firm gas capacity.” So I just think that in general, logic dictates that you have to go clean, not because you care about climate change, but if you want more electrons, if you believe that the grid’s going to double by 2035 or 2040 or triple by 2050, then there’s actually no other pathway.
And then you’re like, “Well, what about electric vehicles?” Same thing, right? When you think about the primary energy versus useful energy fallacy, right we waste so much energy in this conversion from primary to useful energy. So the reason you’re going to industrial heat pumps, the reason you’re doing all this stuff is because it’s actually the only way to scale our energy consumption. And so that’s why none of this stuff bothers me because I’m a first principles guy. I don’t know that I care all that much and I think Elon’s the same way. I think he’s a first principles person. I don’t think he views us from a climate lens. He’s just saying, “I can’t get the BTUs any other way.”
Caroline Golin: Regarding the deeply irresponsible way that xAI is building out its data centers, I think I can use the word reckoning twice in this show and that’s a real great win, bingo card win. I think there will be a reckoning on that and it’s something that I think about a lot because on the opposite side now as a supplier, I mean, I thought about it all day, every day when we were at Google, when I was at Google and now on the opposite side, on the supply side, these are our communities, these are our customers. At the end of the day, who do we have a responsibility to this getting this data center built or all our residential and commercial customers in that same region? And it’s a tough conversation because every investor is saying to every supplier out there, Constellation, Vistra, Talen, NRG and to every IOU out there, nothing matters except landing data center deals.
Nothing you do matters. It doesn’t matter what your retail book looks like. It doesn’t matter what type of innovative stuff you do if you lower your CapEx and increase your revenue returns. It doesn’t matter. All that matters is that you land offtake with these huge behemoths. That’s all that matters. So it’s pulling along a lot of questions on the supply side. I’m actually quite proud of the supply side. I think we’re largely trying to straddle that well, but I’ve said this on stage before and I’ve said this to NRG and our leadership, the big suppliers in this country that think that their historical competitors are their current competitors are just wrong. Our competitors are not really Constellation Invistra and Talent and all these other companies. Our competitors are the behind the meter, recip, jet engine, fuel, insanely irresponsible approach to generating electrons. Those are our competitors.
And so when we talk about like the tailwinds, the biggest industry that I see that is serving to benefit is this really scrappy, we don’t care if we’re here in five years, 10 years, we’re going to make all of our cash and exit industry of this sort of behind the meter Frankenstein approach. And that actually could have serious ramifications to the investment model for traditional energy supply that has been very stable, has been held to the same accountability and honestly hasn’t evolved much in the last couple of years. So that is something I think about now in my new role all the time and that I’m trying to get our side of the aisle to think scrappy, to think innovative, to think out of the box, but do so in a responsible way because we actually do care about the people that surround these data centers.
They are our customers and they matter in the community, right? That was my soapbox. I used reckoning twice and I got on a bit of a preachy soapbox. It’s a good summary.
Stephen Lacey: Well, you brought it back around to why this is very much an energy story, and it matters on a lot of different levels, literally on a civilizational scale level, on a practical industry, how we deploy this stuff level and at a retail investment level, this company is going to show up in a lot of retirement portfolios. Jigar, any final storylines?
Caroline Golin: I think it’s going to be forced to show up in everyone’s retirement portfolio pretty soon.
Stephen Lacey: Are there any final storylines you’re watching out for Jigar in this next phase?
Jigar Shah: I think that just to reinforce Caroline’s point, Tesla was-
Caroline Golin: Wait, wait, can you say that one more time? Just so we can put that on you. And I can have it on my LinkedIn page.
Jigar Shah: Just to reinforce Caroline’s brilliant point.
Caroline Golin: Oh yeah, there you go.
Jigar Shah: I think that the Tesla story was really a retail story because it was cars, right? Then it was batteries, it was solar city, it was solar panels, right The SpaceX story is really more of a Star Wars story, right? There’s a certain group of Americans who care deeply about what SpaceX is doing and the vast majority of Americans have no idea what SpaceX is and what they do except from being one of the largest IPOs in a very long time. And so as a result, I think that when you see that 75% of Americans now hate data centers and every single governor from the governor of Texas to the governor of Wyoming is now putting it out anti-data center executive orders, right? That you are going to see this reckoning, as Caroline suggested, because people feel completely disconnected from the other side, right?
Whether they own 1% of their portfolio in SpaceX stock or not, they generally don’t understand how SpaceX affects their life, right? They’re not on Starlink. And so when you think about just how disconnected this place is, it means that there could be a massive backlash, which then results in extraordinary government regulation.
Stephen Lacey: Well, if it doesn’t work, ship it all off on our rocket and bring it into space.
Caroline Golin: And we will call it some other sort of Orion’s Elon’s belt is what we’ll call it.
Stephen Lacey: And children everywhere will be standing at top of mountain, gazing at the scale.
Caroline Golin: Oh, it was so sweet. How beautiful it is. I almost cried when I thought, God, I’m really busting childhood right now.
Stephen Lacey: Thanks so much to both of you. Caroline, good to see you. Same, same.
Stephen Lacey: Jigar, good to see you. Have fun at Reindustrialize.
Jigar Shah: Of course.
Stephen Lacey: Is that what it’s called? Did I get it right? Reindustrialized?
Jigar Shah: Yeah, reindustrialized.
Stephen Lacey: Cool. Open Circuit is produced by Latitude Media. The show is edited by me, Sean Marquand and Anne Bailey, Caroline Golin and Jigar Shah, are my co-hosts. All of our episodes are on YouTube, subscribe to Latitude Media for episodes of Open Circuit and Catalyst. You can find the audio version, of course, anywhere you get your audio podcasts and transcripts are at latitudemedia.com. While you’re there, sign up for our newsletters to get all of our industry coverage on the topics that you hear us chat about on this show. Thank you, everyone. We will catch you next week.
