- 3 months ago
Category
🗞
NewsTranscript
00:00Ross, are you? I'm a SpaceX owner, too. You didn't you didn't mention that.
00:05Well, that's explain. So remind. Yes. Explain away.
00:09Well, explain away. I got involved with this wonderful deal that was presented to me four years ago to invest
00:14in Twitter.
00:15And boy, oh, boy, did we do great with that, huh?
00:18So I had written down that stake in Twitter to about 25 percent of its original investment.
00:23And then somehow XAI came and bought Twitter and then somehow SpaceX bought XAI.
00:29And and now today, you know, I've now made like over three times my money investing in Twitter.
00:35So, you know, there is a thing called luck in the world. And I'm I'm lucky.
00:40So you've tripled your money from four years ago and investing in the take private of what is now X
00:46and owned by XAI, which is part of SpaceX.
00:48Of course. What do you do with those with that part of ownership?
00:53Do you hold on to it or do you sell it when you can?
00:56Well, I'm building a new pool, but that has nothing to do with my SpaceX.
00:59I want to continue and employ lots of people because it's fun.
01:03But no, I'm holding my space.
01:05No, an actual pool, an actual pool.
01:07I was thinking I'm building an actual physical pool in the A.I. era.
01:11I'm taking my A.I. profits and doing something really worthwhile, employing people to dig holes.
01:18But that said, you know, SpaceX is one of the most interesting companies I've ever seen.
01:23And we have such a unique viewpoint of SpaceX because we work with so many SpaceX clients and we're getting
01:29more all the time.
01:30And we've really been focusing on helping SpaceX employees because it's down the street from us here in Los Angeles
01:36is kind of their main one of their main hubs.
01:39And so, you know, I've met some incredible people over the last several months doing incredible things.
01:45These are the highest caliber engineers in the world that have made our space program, because it's really the United
01:53States space program, just so amazingly unique and successful.
01:57So what we have in store for us over the next decade is really exciting.
02:02Hey, so, Ross, just want to ask you.
02:04So you own the stock?
02:06You're happy about that?
02:07Will you continue owning it?
02:09Or do you think the valuation is kind of crazy?
02:10And I'm not selling it, you know, I got my 10 year old kid sitting here because he's out of
02:14school.
02:15And when I start thinking about what his life is going to be like when he's only 20, you know,
02:20like 10 years from now, like space is just going to be something that's like I keep making this joke.
02:24It's like easier to go to space than New Jersey, you know.
02:27And so, you know, the truth is, I think it's harder to go from New York to New Jersey than
02:31it will be in space to go to space in 10 years.
02:34And Ross, to be clear, this is you, Ross Gerber, personally, as opposed to Gerber Kawasaki.
02:40That's correct.
02:40I personally own the shares in my firm, in our own firm account, own shares, because when the Twitter deal
02:47came by, you know, Elon really didn't want to do the deal.
02:51So we didn't actually sell the deal to our clients because I was like, I can't sell this.
02:55The guy doesn't want to do it, you know.
02:57And so they basically called us the last night and was like, do you still want to invest because we're
03:00actually doing this?
03:01And so I just like wrote a check because it was Elon, you know.
03:06But none of our clients have been able to participate in this.
03:10Well, fortunately and unfortunately, because remember, it started off pretty bad.
03:14You didn't get an allocation or submit a bid for an allocation in the IPO or go into the open
03:20market today.
03:20I'm being mechanical, but I'm just.
03:23No, we haven't done open market purchases of SpaceX today because our firm does not buy IPOs for very good
03:28reasons, which I'm happy to talk about.
03:30Well, can I ask you?
03:33Well, secondly, we did request IPO allocations for clients of ours that are at Fidelity and Schwab because we work
03:39with both of them and they did provide.
03:41So some of our clients did get small allocations of SpaceX stock today as well.
03:46So the.
03:48But those were unsolicited, you know, like the clients really wanted it.
03:52Yeah.
03:53The reason that's insightful is like there are people listening to Bloomberg Business Week or watching Bloomberg Business Week that
03:59are in the same boat.
04:00Right. And they're just thinking, like, you know, what did I do here?
04:02But the hypothesis presented to me by loads of people is they didn't sell their Tesla shares to get some
04:09liquidity to participate, in part because they just see that the Tesla SpaceX merger happening imminently.
04:16And so what would be the point?
04:19I may ask where you stand on that idea today.
04:22Well, I very I tweeted again this morning.
04:25I mean, I know you did.
04:26How long does this take till they put these companies together?
04:28And then even Gwen Shotwell today didn't, you know, poo poo the idea when it was brought to her and
04:33actually said that it makes sense.
04:35So, you know, we know this is going to happen at some point.
04:38And I think a lot of that has to do with what valuations SpaceX and Tesla really are to make
04:43this combination work for both sets of shareholders.
04:45So that doesn't create a lot of lawsuits and other issues.
04:49So so I think it's it's definitely a foregone conclusion.
04:52Now, I do agree with you that that props up Tesla stock because, you know, people are like, well, I
04:58didn't say that.
05:00Well, OK, my feeling is it props up Tesla stock because people don't want to sell their Tesla if it's
05:06just going to get bought out by SpaceX anyways, you know.
05:08And so I do think that that helps Tesla that the perception is that they will be acquired by SpaceX
05:14or merge.
05:15So so, Ross, maybe in your view, it works for investors.
05:18Does it does it work from an actual operations perspective?
05:21Oh, 100 percent.
05:23In fact, well, I would argue that this is really unfair to Tesla.
05:28And it's one of the real gripes I've had over the last several years is the way they took, you
05:33know, Tesla's chips and Tesla's engineers and built XAI, which was the brains of Tesla's, you know, optimist robot and
05:42full self-driving.
05:42And then Elon goes on TV and says this is the entire value of the company is based off if
05:47we can can can succeed with full self-driving.
05:50But yet the brains of full self-driving isn't owned by Tesla.
05:53Like that's super wrong.
05:55It just doesn't make any sense that I have a bunch of robots and cars that will not work without
06:01another company's technology.
06:03So Tesla, in my mind, is worthless if it doesn't merge because it doesn't own the IP to the brains
06:10to their own products like like it just makes no sense.
06:15All right. Speaking of the brains, the brains behind anything with Elon's universe is obviously Elon Musk.
06:22And we talk a lot about risk to the company.
06:25We talk about governance, but we also just talk about, you know, how much what he does, his brain, his
06:32oddness, if you will, some might say, you know, is what makes this company tick.
06:39You're much better on this and on the governance and stock structure.
06:44Nell Minow, Value Edge Advisors vice chairman, joined the closed team yesterday on Bloomberg Television.
06:49Let's all listen up to what Neil had to say.
06:52Neil had to say all of those protections that you talked about, the ability to vote proxies, the ability to
06:57sell the stock, the ability to sue.
06:59All of those are there to reassure investors, having independent directors on the board.
07:04All of those are there to reassure investors that their money is being taken care of in a principled way
07:10for their benefit, not for the benefit of the insiders.
07:12And all of those have been obliterated by this offering.
07:18You know, Elon Musk has appointed himself CEO for life.
07:23He's the only one who can remove himself.
07:24Not even his board of directors can remove him.
07:27He has all the voting control.
07:28He has basically built a moat with alligators around himself.
07:32And that's not good for shareholders.
07:36Nell Minow, Value Edge Advisors vice chairman on Bloomberg Television yesterday.
07:41Ross, my understanding that you were kind of laughing as you were listening to that.
07:45Well, you know, there's no companies that have ever been run like Tesla and SpaceX in the history of public
07:53companies.
07:53And so I find her outrage to be humorous because that's basically how it's worked for Tesla for the last
08:0015 years.
08:01And, you know, the board is not independent.
08:04They do whatever Elon says.
08:05The pay packages are approved because index funds just push yes to whatever management puts forward.
08:11So Elon's taking advantage of a system where 20 percent of his companies owned by robots that don't make any
08:18decisions.
08:19There's nothing worse than Vanguard for shareholder rights.
08:22So if she wants to complain, she should be complaining about Vanguard, not Tesla.
08:27And the fact that Elon takes advantage of the fact that, you know, there's basically going to be nobody but,
08:33you know, somebody like me who goes out on TV.
08:35But as far as trying to vote change into Tesla or SpaceX, never going to happen.
08:41So does he take care of shareholders?
08:43Yeah, they've made a lot of money.
08:44So that's taking care of shareholders.
08:46Any way you do the math, whether I vote proxies or not, what matters is whether I'm making money.
08:52And I've made over 100 times my money investing in Tesla.
08:55And so I just think, you know, when you invest with Elon, you have no rights.
09:00You get on the bus.
09:01You don't like the bus.
09:02Get off the bus.
09:03But if you want to be on that bus, he has rewarded people who has done that.
09:09And that's why people are giving him such a ridiculously high valuation is because he has rewarded shareholders in the
09:16past and in a way that very few CEOs have.
09:19So, you know, I get the outrage and all that.
09:22Then don't buy the stock.
09:23Ross, may I just.
09:25It was very clear in the S1, you know.
09:27Exactly.
09:27And like, I'm just relying on recounting what was in the S1, right?
09:31The restriction that's placed on Musk's comp.
09:35I'm just going to read it out because, you know, it's the only way the audience will come to have
09:40a sense of it.
09:41He has a 1 billion restricted Class B shares award that's contingent, A, on market cap milestones.
09:47So, if he achieves the market cap milestones, the shareholders get rewarded, you say.
09:51But Musk's compensation package is tied to establishing a permanent human colony on Mars with at least 1 million inhabitants.
09:59I don't want to give a long-winded question, but you explained to the audience how you came to be
10:04a SpaceX investor and shareholder.
10:08That goal, what does it mean to you?
10:13It means I might have a chance of not having to pay him the billion shares, you know.
10:18So, I kind of like that, you know.
10:21I don't think we're going to have a million people living on Mars.
10:24So, you know, that's good news if you're a SpaceX shareholder.
10:29And I can give you a lot of reasons that Elon might want to argue with me about, and I'm
10:33a more practical person.
10:34But I don't think you could talk a million people into going to Mars, you know.
10:40Like, unless Mars looks a lot like Hawaii, I don't think people want to go there.
10:45And Mars doesn't look like Hawaii.
10:47So, I don't know.
10:49I don't know who's moving to Mars.
10:50We're speaking with Ross Gerber.
10:52And it's far away, by the way.
10:53It's far away.
10:54There's no air.
10:55Ross Gerber, president and CEO of Gerber Kawasaki Wealth and Investment Management.
10:59I did make that point earlier in our last hour about when people compared Mars to potentially being the next
11:05California.
11:06I pushed back a little bit there.
11:08I'm not moving from here for anything.
11:11Even if they put socialists here, I'm not moving.
11:14I still think he's going to put Optimus robots on and one million.
11:17That's what I think.
11:18That's what I think.
11:19I think the robots are the ones doing the work in space and going to Mars.
11:25So, Ross, I want to put aside the question of sort of governance right now and these pay packages and
11:31just get back to your view of SpaceX shares right now.
11:36You said Gerber Kawasaki does not buy on the first day of IPOs.
11:40What restrictions do you have or have you put out?
11:42It's sort of a rules-based buying when it comes to IPOs.
11:45And when would you start getting your clients in, even if they're not asking for it?
11:51No, they're asking for it.
11:53Some of them – we've talked to a lot of wealth managers lately who have said some people want it
12:00badly.
12:00Some people want nothing to do with it.
12:02Like we've had three examples of that recently this week on air.
12:06Yeah, you know, and that's – we have so many clients.
12:09We have all those examples, right?
12:12What I think – because the way my firm works, you know, we don't tell people no.
12:16You know, like if a client's like, I really want to do this, we don't say no.
12:19You know, it's our job to advise our clients.
12:21So, we advise them of the risks of it and then we'll execute the transactions as unsolicited if they want
12:27to – if they really want to do that.
12:28And we've – you know, we do that.
12:30Now, I haven't done that today for anybody because I've talked them out of it, you know, because they listen
12:37to my advice, which is IPOs are really difficult.
12:40Okay, and I've been trading for 32 years and I did .com and I trade billions of dollars.
12:48So, just from my experience, it's really, really hard to make binary decisions like I'm putting $100,000 of my
12:56retirement money into SpaceX today and that's it and I will never look at it for 10 years because that's
13:01just not what investors do.
13:02So, if you were able to do that, I would say, okay, you know, buy the IPO, pay up for
13:08it, but in 10 years you'll be happy.
13:10But nobody actually does that.
13:12What happens is they look at their account in six months and it's down 30% and then they panic
13:16and they sell it right before it goes back up.
13:18And so, investor psychology and behavior makes IPOs extremely difficult because of the volatility.
13:25So, I don't know what the market's going to do over the next 12 months, let's say.
13:29And, you know, and then you've got a very high-priced IPO that has no PE ratio and then maybe
13:35markets go down for some reason.
13:37Well, SpaceX is going to go down more than the market.
13:39And if the market stays the same or goes up, there's the potential that SpaceX stays the same or also
13:45goes up.
13:45But what I say is how much upside can you get if you buy the stock today until this company
13:51actually produces earnings, which might be three to five years from now.
13:56So, you've got plenty of time to get into SpaceX.
14:00So, if you really, really want it, what I tell people is buy 20% of what you want to
14:05buy today.
14:06If it's $10,000 in SpaceX, you buy $2,000 today.
14:09And then you wait a month and you buy another $2,000 and you wait another month and you get
14:13in over the next five months.
14:15But what I would really say is wait until the lockups expire.
14:19Wait.
14:19There's a lot of liquidity and a lot of people want to get this liquidity.
14:23They've worked at SpaceX for a very long time and they're not going to be quitting and they're not this
14:27and that.
14:28But they want to buy a house in L.A.
14:30And a house in L.A. costs $2 to $3 million just to get in.
14:33And these people are living in apartments.
14:35You see what I'm saying?
14:35So, they're going to sell some of their stock to buy a house.
14:39And they're going to sell some of their stock so that they have some financial security, which is what we're
14:44advising them.
14:45But many of the employees at SpaceX are not selling their stock.
14:48And I just want to make it very clear.
14:50Many of them, these are the people who believe in their mission and they're working extremely hard.
14:55And after meeting many of these people, I believe in their mission.
14:58And Elon gets too much credit.
15:00I just want to say this.
15:02It's not Elon Musk that's made SpaceX successful.
15:05It's the people there.
15:06Elon Musk is a visionary and he guides the company.
15:08But the truth of the matter is he does not really run SpaceX.
15:12The people running SpaceX are excellent.
15:14Ross, 30 seconds left, though.
15:16We do think about succession.
15:17So, does Elon, does it become even more important on this day where we continue to see the Elon universe
15:24get bigger and bigger, that there is a succession plan in place?
15:27Is there one that you know of?
15:30Just quickly.
15:31See, at SpaceX, yes.
15:33I think if Elon died tomorrow, SpaceX would be fine, actually.
15:36SpaceX has great management.
15:38And they've been very independent for a long time.
15:41And many of the employees, and I'm not going to, you know, say where they were, divisions they were, they
15:46don't like Elon either, okay?
15:48They, you know, having a mission like going to Mars or going to the moon or building a starship is
15:55what motivates people.
15:57A lot of what Elon does hurts SpaceX and hurts the company.
16:00So, SpaceX has a much better management team than Tesla when it comes to succession.
16:06And I'm much more confident about his success, even if Elon isn't involved.
Comments