SpaceX: past, present, future – and finding the next world-changers
episode
Short Briefings on Long Term Thinking - Baillie Gifford
36 min
2 speakers
3 chapters
transcribed 1 month ago
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Transcript generated automatically by AI and may contain errors.
How did Elon Musk's Moscow trip lead to the founding of SpaceX?
In 2002, Elon Musk traveled to Moscow to negotiate buying two decommissioned missiles. Drawing on his PayPal wealth, he wanted to land a robotic greenhouse on Mars and reinvigorate interest in the red planet. The meeting went badly. As one biography of Musk recounts, the Russians dismissed the entrepreneur's $8 million offer, saying, young boy, no. On the flight back, Musk checked his numbers and concluded, we can build the rocket ourselves. And some 24 years on, Musk, his chief operating officer, Gwynne Shotwell, and some of the brightest engineers on Earth have taken that realization and rewritten the economics of getting to orbit. And Bailey Gifford has supported them in their mission as a shareholder since 2018.
To mark SpaceX's record-setting listing and addition to the NASDAQ 100, we're dedicating this episode to the company. I'll ask the investment manager who propelled us to take that initial stake. What lessons he's learned and what's the latest game-changing company to catch his eye? Welcome to Short Briefings on Long-Term Thinking. I'm Leo Kellyan and I'm joined by Luke Ward, an investment manager on our private companies team and co-manager of the Edinburgh Worldwide Investment Trust. Before we begin, a quick reminder. As with any investment, your capital's at risk and your income is not guaranteed. Luke, welcome to the show. Thank you. Luke, the last time that you were on the podcast was in 2025. Huge amount has happened since then.
And I do want to get to the initial public offering, the listing of SpaceX and the future of the company. But to begin with, let's find out why we were able to invest so early. So what was it that first drove your interest in SpaceX?
Yeah, so this probably started during my engineering degree in mechanical engineering. And it was around that time that the space shuttle was being decommissioned. And there wasn't an obvious successor to that in space exploration. Post the financial crisis, there wasn't really the budget to support a big investment there as well. And so for me, many of the other people on the course, it was a bit depressing that we weren't really pushing the frontiers in the same way that we'd maybe been led to believe from growing up on this diet of science fiction. But there were a few companies and entrepreneurs who were taking the risk on developing rockets of their own. SpaceX was one of them, although nowhere near as famous in the public eyes at that time, but held up as a place where it would be an aspirational place to go and work for.
That sort of stuck in the back of my mind as I became an investor and looking at many more traditional industries and still kept an eye on this company. And it was in 2015 when it demonstrated reusability, so the ability to land and recover one of these rockets. that I think I had the confidence to suggest to colleagues that this might actually be an area that is investable for our clients and it could actually be something that could be profitable rather than something that's usually the preserve of governments and is associated with cost rather than capability.
So I looked in our research library, which is where you and the other investment managers and analysts publish their thoughts. And the first paper I could find on SpaceX dates to 2016. You wrote it. And inside it, you've pasted a photo of Elon Musk shaking a pair of maracas at the company's launch. And beside it, you wrote a note saying that SpaceX has a very different mindset to the incumbents in the space industry. Percussion instruments aside, what were you getting at there?
Yeah, so trying to make the point that culturally this company is quite different. That's maybe a bit of an evocative way to do it in a research note, but I think it hopefully got people's attention. The point being that if you structured a company the same way as we'd always done, optimizing for the political reality of budgets rather than the blank sheet of paper afforded by billionaire status, for example, you would end up with a company that just does something very similar to the past.
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