As AI companies race to go public, who’s along for the ride?

SpaceX went public this week in the largest IPO ever, making CEO Elon Musk the world’s first trillionaire.

Despite its name, SpaceX has emphasized the potential of its expensive AI business, and competitors OpenAI and Anthropic may soon follow suit with their own public market debuts. So on the latest episode of TechCrunch’s Equity podcast, Kirsten Korosec, Sean O’Kane and I discussed what looks like a hot IPO summer.

“We have SpaceX, which is not only sucking up a large portion of the money available in public markets, but also really stress testing the limits of what a public company can be and how much it can be controlled by a single person,” Sean said. “My eye is really on these other tech companies that are going to go public and how much they’re going to try to emulate.”

Kirsten also noted that there are other startups trying to “ride the SpaceX IPO wave,” for example by raising money for orbital data centers after SpaceX helped popularize the concept.

“So there’s a ripple effect happening throughout the market that I think is probably even more interesting than just the headline ‘SpaceX makes Elon a trillionaire,'” she said.

Continue reading for a preview of our conversation, edited for length and clarity.

Anthony Ha: I’m going to zoom out a bit from just the SpaceX IPO, because beyond Elon Musk of it all, it’s the beginning of what could be a [series] of various IPOs for various AI companies. We’ve talked about Anthropic filing confidential information, and now OpenAI has done the same. How excited are any of you about this?

Kirsten Korosec: I want to start by saying that I love Julie Bort’s story, which I think sums it up pretty well. That’s a great headline, so I’ll read it here: “It’s not FAANG anymore, it’s MANGOS.” FAANG is Facebook, which is now Meta; Amazon; Apple; Netflix; Google, now Alphabet.

Now it’s moved and we have Meta, Anthropic, NVIDIA, Google, OpenAI, SpaceX. [We’ve still got] massive tech companies, sure, but there’s a shift here, right? First of all, we have a lot of AI labs in there, and it’s very different. Netflix is ​​launched from there, a huge streaming service. And so to me it’s an interesting shift in terms of the public markets and the huge amount of money and capital that’s available in the public markets that’s moving away from consumers [and] social networks and mods, specifically, AI labs and other, more innovative deeptech, such as SpaceX.

So I think that’s the most interesting thing – apart from the fact that this summer is going to keep us all very busy as journalists, more so than probably any other summer for a while.

Sean O’Kane: You know, once upon a time I wanted to be a lawyer and one of the reasons I didn’t was because I hated the paperwork involved. And here I am looking forward to reading several hundred pages of SEC filings this summer – talk about beach reading.

It’s a moment we’ve been waiting for for a while. We’ve spent the last few years really wondering if the IPO market would quote-unquote “reopen” after much consternation over private markets and derision about people hitting their like streaks [whatever] collection round. This is a good stress test – I mean, “good”, take whatever word you want – a good stress test of public markets in general.

We have SpaceX, which is not only sucking up a large portion of the money available in public markets, but also really stress testing the limits of what a public company can be and how much it can be controlled by one person. My eye is really on these other tech companies that will go public and how much they will try to emulate.

One thing that I keep saying and thinking about with SpaceX is that they’re really trying to take some of the most extreme aspects of Google and Meta’s original IPOs back in the early 2000s and mix it up with “We’re losing money forever” with Amazon. And I’m curious how much Anthropic and OpenAI will try to do the same. Will they remake themselves in the image of SpaceX? Or will they try to put themselves in a different light?

Anthony: Also, one aspect that was really driven home when I read about the OpenAI IPO is the extent to which some of this is also a bit of a race in terms of timing. I think we can safely say at this point, SpaceX is first out of the gate, which probably has some pros and cons. It’s also a bit of a different company because it bills itself as an AI company, but of course has a lot of other things going on as well.

But there’s a sense where OpenAI and Anthropic, at least according to some analysts, might want to go before the other because there’s only a limited amount of capital, a limited amount of interest. At some point, some of these valuations have to start coming back to Earth, and so they can both fight to be first.

Kirsten: I mean, there is very much a race between Anthropic and OpenAI. You even see OpenAI talking about lowering prices, and they are definitely going to compete on the IPO calendar. But that is very short-term thinking. If they’re smart, they should be much more concerned about the long-term game here.

What’s really interesting to me is that while Anthropic, OpenAI, and SpaceX are all preparing for these moments, there are a ton of other companies out there that are raising money on the backs of companies like SpaceX’s success or going into SPACs. Just today, for example, or as we record this, a company called Quantum Space is doing a SPAC and is absolutely trying to ride that SpaceX IPO wave.

We have a ton of other startups that our reporter Tim Ferholz has reported on that are clearly — they’re not going to go public, are they? But if SpaceX is successful with space data centers, they collect money from that potential and they build businesses on that potential. So there’s a ripple effect happening throughout the market that I think is probably even more interesting than just the headline, “SpaceX makes Elon a trillionaire.”

Sean: The widely accepted theory in Silicon Valley is that AI is about to remake the economy, but because of its use. AI is indeed already reshape the economy – just because of how people try to build it. We have everything you just described, we have these other companies rushing to public markets. And I think that’s a really good point to think about: Will they ever regret rushing to public markets?

But we even have companies like Ford and General Motors pivoting their unused battery-making capacity to be energy providers for data centers. And Ford’s stock shot up when it announced what is, frankly, a pretty modest-looking energy storage company compared to something like Tesla. And Tim De Chant also had a really good series of stories this week on the GM pivot.

The economy is already being remade. Whether it’s sustainable, again, that’s the question, but it’s happening right now.

Kirsten: That’s actually a really good point, because for me, I would say five, six, seven, eight years ago, there were all these headlines about “the next Tesla killer,” and these automakers and other companies are still scrambling to try to recreate all these different companies, and specifically the strategies of Elon Musk-based companies. They haven’t learned their lesson.

I wish I could communicate this to all the CEOs of automakers out there: I get that you have a lot of unused batteries and you want to pivot to something else, but trying to model your business after Tesla or SpaceX and others doesn’t always work. Maybe look elsewhere.

Sean: So Ford should not get into space data centers. Is that what you say?

Kirsten: No, they shouldn’t. But just look. This is going to happen.