WEBVTT - AI Gets Frothy and Elon's Impact on Texas 0:00:03.120 --> 0:00:11.120 Bloomberg Audio Studios, Podcasts, radio news. 0:00:14.240 --> 0:00:17.120 Well, Elon Musk is now the richest person on the planet. 0:00:17.480 --> 0:00:20.319 More than half the satellites in space are owned and 0:00:20.440 --> 0:00:22.160 controlled by one man. 0:00:22.760 --> 0:00:24.640 Well, he's a legitimate super genius. 0:00:24.840 --> 0:00:25.759 I mean legitimate. 0:00:25.960 --> 0:00:28.600 He says he's always voted for Democrats, but this year 0:00:28.640 --> 0:00:29.400 it will be different. 0:00:29.440 --> 0:00:30.400 He'll vote Republican. 0:00:30.680 --> 0:00:33.159 There is a reason the US government is so reliant 0:00:33.200 --> 0:00:35.720 on him. Alon Musk is a scam artist and he's 0:00:35.760 --> 0:00:36.760 done nothing. 0:00:36.479 --> 0:00:51.880 Anything he does, he's fascinating people. Welcome to Elon, Inc, 0:00:52.000 --> 0:00:54.400 Bloomberg's weekly podcast about Elon Musk. 0:00:54.680 --> 0:00:56.080 It's Tuesday, August sixth. 0:00:56.120 --> 0:00:59.240 I'm your host, Max Chafkin, filling in for David Papadopolis. 0:01:00.520 --> 0:01:04.120 Is dominating the news today with the vice presidential pick 0:01:04.280 --> 0:01:07.800 being announced. But in the world of markets and money, 0:01:07.840 --> 0:01:10.760 which is to say, our world, all the conversation has 0:01:10.800 --> 0:01:13.959 been around the big sell off that happened in Asian 0:01:14.000 --> 0:01:16.920 markets on Monday, and that has continued to reverberate. Here 0:01:17.000 --> 0:01:20.280 in the US, stocks took a big hit yesterday, but. 0:01:20.440 --> 0:01:21.600 They're rebounding today. 0:01:21.640 --> 0:01:24.160 But really, like all of this kind of chaos and 0:01:24.160 --> 0:01:27.119 the lingering fears of a recession are leading to some 0:01:27.160 --> 0:01:30.880 really hard questions about what it means for markets in 0:01:30.920 --> 0:01:33.120 general and in particular the technology industry. 0:01:33.400 --> 0:01:35.119 There have been questions sort of. 0:01:35.080 --> 0:01:38.520 Building up over the last year that the hype around 0:01:38.600 --> 0:01:41.920 AI artificial intelligence might be overblown, that we might be 0:01:41.959 --> 0:01:44.560 in the middle of a bubble, and this week people 0:01:44.560 --> 0:01:47.960 are starting to really seriously ask is that bubble starting 0:01:48.000 --> 0:01:52.120 to burst? This would have huge implications for Elon Musk 0:01:52.560 --> 0:01:55.080 and for the world, but in particularly for Elon because 0:01:55.080 --> 0:01:58.080 he's staked his, you know, the future of Tesla on AI, 0:01:58.400 --> 0:02:01.400 the future of several of his company, including x. 0:02:01.480 --> 0:02:03.480 And his AI company Xai. 0:02:03.720 --> 0:02:06.520 We're going to be talking today to Bloomberg's Big Tech 0:02:06.640 --> 0:02:11.120 editor Sarah Fryer and social platform reporter Kurt Wagner about 0:02:11.160 --> 0:02:12.280 all this market action. 0:02:12.840 --> 0:02:15.119 Kurt, Sarah, thank you for being on Elon. 0:02:15.040 --> 0:02:15.960 K, thanks for having me. 0:02:16.080 --> 0:02:16.919 Yeah, thank you, Max. 0:02:17.360 --> 0:02:20.200 And then later we're going to share another one of 0:02:20.240 --> 0:02:23.639 our conversations as part of our great summer series of 0:02:24.400 --> 0:02:27.720 deep chats. Today's is one that I had with the 0:02:27.880 --> 0:02:32.480 two Texas based journalists, Rachel Monroe and Chris Hooks. Okay, 0:02:32.639 --> 0:02:35.000 so let's get to it. Sarah, what did the tech 0:02:35.040 --> 0:02:37.320 world wake up to on Monday morning? What did Elon 0:02:37.480 --> 0:02:39.560 Musk wake up to on Monday morning? 0:02:39.720 --> 0:02:44.400 I mean every market indicator was down, Nickay down, you 0:02:44.520 --> 0:02:48.880 got Crypto go down, the Vix up, volatility, and investors 0:02:48.919 --> 0:02:52.080 piles into bonds like it was just like a whole 0:02:52.160 --> 0:02:56.520 out panic. Those are some economic indicators driving this, some 0:02:56.960 --> 0:03:02.560 US economic strength indicators. But there's also this fear brewing 0:03:02.680 --> 0:03:08.160 for big tech companies that they have maybe promised and 0:03:08.200 --> 0:03:12.840 invested more than they've delivered or even are showing signs 0:03:12.840 --> 0:03:16.560 of being able to deliver in AI. The whole growth 0:03:16.960 --> 0:03:20.280 plan in AI is going to cost billions upon billions 0:03:20.280 --> 0:03:24.320 of dollars, and it's not clear that that is translating 0:03:24.880 --> 0:03:29.040 into better revenue, certainly not better profits, and that is 0:03:29.160 --> 0:03:32.840 causing a lot of concern. I'm here in Silicon Valley. 0:03:33.040 --> 0:03:35.640 I feel like I've had a little bit more of 0:03:35.680 --> 0:03:38.680 the kool a than Wall Street, so I've seen a 0:03:38.680 --> 0:03:42.200 lot more in terms of what AI is changing about 0:03:42.200 --> 0:03:46.520 how people work than maybe the market has. That said, 0:03:46.600 --> 0:03:49.960 i mean, you know, the way that stocks have clined 0:03:50.400 --> 0:03:53.520 on the promise of AI has been just astounding, and 0:03:53.560 --> 0:03:56.720 the amount of money pouring into it is maybe unsustainable. 0:03:57.640 --> 0:03:57.839 Yeah. 0:03:57.880 --> 0:03:59.960 I mean, I feel like the conversation that we've had 0:04:00.120 --> 0:04:03.120 had on this podcast for the last year about kind 0:04:03.120 --> 0:04:08.000 of Elon Musk's promises around AI and Tesla, or promises 0:04:08.040 --> 0:04:10.440 around AI and Rock. I mean that's been happening at 0:04:11.000 --> 0:04:13.120 like kind of every tech company, right, Kurt. 0:04:13.400 --> 0:04:13.680 Yeah. 0:04:13.680 --> 0:04:15.880 And I was going to say, I think something that 0:04:16.240 --> 0:04:19.120 Mark Zuckerberg at metas said a few weeks ago to 0:04:19.240 --> 0:04:20.440 our very own Emily Chang. 0:04:20.480 --> 0:04:20.719 I was. 0:04:20.760 --> 0:04:23.280 I was in the room down at Meta's headquarters when 0:04:23.320 --> 0:04:25.760 she interviewed him, and he basically said, there's a very 0:04:25.800 --> 0:04:29.159 real possibility we're all spending billions of dollars too much 0:04:29.240 --> 0:04:33.080 money right now to chase this thing, because the fear 0:04:33.200 --> 0:04:35.800 of missing out is so high, right, So, in other words, 0:04:36.040 --> 0:04:39.640 we're willing to overspend. We know even that we're overspending 0:04:39.720 --> 0:04:42.839 on AI right now. We're over indexing that way because 0:04:42.880 --> 0:04:46.000 you can't afford to not do it. And so I think, 0:04:46.240 --> 0:04:49.440 you know, we may see some short term repercussions of 0:04:49.480 --> 0:04:52.080 that overspend, which is going to be you know, a 0:04:52.120 --> 0:04:54.320 dip or a little bubble or whatever it may be. 0:04:54.960 --> 0:04:56.880 But I think that gives you a glimpse into the 0:04:56.920 --> 0:04:59.159 mindset of the leaders of these companies, because I imagine 0:04:59.160 --> 0:05:01.719 if Mark Zuckerberg feel way, that's sort of probably how 0:05:01.760 --> 0:05:03.880 a lot of these guys feel, is that they have 0:05:03.960 --> 0:05:05.080 to have to have to spend. 0:05:05.560 --> 0:05:08.000 It was just so wild too. When Kurt showed me 0:05:08.040 --> 0:05:11.159 that quote, I was just like imagine just being like, yeah, 0:05:11.200 --> 0:05:13.920 we may be overspending by billions of dollars, but that's 0:05:13.960 --> 0:05:15.839 just how we roll when we need to do something 0:05:15.880 --> 0:05:16.160 like this. 0:05:16.480 --> 0:05:18.920 Yeah, it's for AI. So it's all good. I mean 0:05:18.960 --> 0:05:19.640 not a good sign. 0:05:19.720 --> 0:05:22.560 And I mean, you know, just to sort of put 0:05:22.600 --> 0:05:24.640 something more specific on what you were saying, Sarah, I mean, 0:05:24.839 --> 0:05:27.000 there's been a lot of talk about and obviously a 0:05:27.040 --> 0:05:30.840 lot of successful products and and sort of demonstrations around AI. 0:05:31.320 --> 0:05:33.640 Just like not a lot of revenue coming in to 0:05:33.720 --> 0:05:37.159 these companies, at least not yet. And let's just bring 0:05:37.200 --> 0:05:39.160 it around to Elon. I mean, what does this mean 0:05:39.839 --> 0:05:44.160 for him? I mean, if the AI bubble is bursting, 0:05:44.520 --> 0:05:47.240 I mean he's been going around saying you're gonna be 0:05:47.320 --> 0:05:49.360 You're wrong to think about Tesla as a car company. 0:05:49.360 --> 0:05:51.200 You should think about as an AI company. Are we 0:05:51.240 --> 0:05:53.640 gonna get on the earnings call? Like you know, a 0:05:53.680 --> 0:05:56.120 few months from now, and he's gonna say, actually, if 0:05:56.160 --> 0:05:58.040 you think about Tesla as an AI company, you got 0:05:58.040 --> 0:05:58.599 it all wrong. 0:05:58.760 --> 0:06:00.520 You got to think about it as a car company. 0:06:00.560 --> 0:06:01.200 Cars are the thing. 0:06:01.880 --> 0:06:04.680 There's no way that he could achieve, you know, the 0:06:04.760 --> 0:06:08.200 valuation that he's achieved by just calling it a car company. 0:06:08.400 --> 0:06:10.040 It needs to be something more. It needs to be 0:06:10.160 --> 0:06:12.839 a promise for the future. And at one point, Tesla 0:06:13.000 --> 0:06:16.880 is going to revolutionize the environment, right like it just 0:06:17.080 --> 0:06:20.200 there always has to be some bigger dream that people 0:06:20.200 --> 0:06:23.120 are chasing. And I think that's what's happening across big tech. 0:06:23.160 --> 0:06:27.400 All these companies are maturing, their legacy businesses aren't producing 0:06:27.880 --> 0:06:29.880 the level of growth that they used to, and so 0:06:30.080 --> 0:06:32.000 the leaders of these companies need to come up with 0:06:32.040 --> 0:06:34.839 another promise for what the future is going to hold 0:06:34.920 --> 0:06:38.800 and cast themselves in their companies almost like startups all 0:06:38.839 --> 0:06:43.320 over again. And in AI there is some way of 0:06:43.360 --> 0:06:46.440 believing that the big tech companies will continue to lead, 0:06:46.760 --> 0:06:50.720 if only because it is so expensive to develop an 0:06:50.720 --> 0:06:53.280 AI that it is one of those markets where you 0:06:53.360 --> 0:06:55.800 might not get the rug taken under you by an 0:06:55.880 --> 0:06:59.599 upcoming company that is just building something in the garage, 0:06:59.680 --> 0:07:02.280 right you really need do need capital to do this? 0:07:02.320 --> 0:07:03.800 And the big top companies have capital. 0:07:04.040 --> 0:07:07.120 Yeah, speaking of capital, I mean shortly after the Tesla 0:07:07.160 --> 0:07:09.880 learnings called, Elon Musk floated the idea in a poll 0:07:09.960 --> 0:07:12.760 I believe, right right, Kurt of a Tesla making an 0:07:12.800 --> 0:07:16.240 investment in x dot Xai, which had me kind of wondering, like, 0:07:16.440 --> 0:07:18.960 what do we even know about is I mean beyond Grock, 0:07:19.280 --> 0:07:23.320 what is x Ai? Like? Where does XAI sit right now? 0:07:23.440 --> 0:07:26.040 And should we think about this as an investment or 0:07:26.120 --> 0:07:28.240 is it more of a you know, a bailout, a 0:07:28.280 --> 0:07:30.760 way for Elon must to absorb some of those very 0:07:30.840 --> 0:07:32.400 high costs that Sarah's talking about. 0:07:33.080 --> 0:07:35.440 Well, Xai, I'll start with the first part of that question, 0:07:35.640 --> 0:07:38.080 is still a bit of a mystery, quite frankly. I mean, 0:07:38.120 --> 0:07:40.240 we don't know a ton about it. We included it 0:07:40.560 --> 0:07:43.120 on a list of our you know, ten Ai companies 0:07:43.160 --> 0:07:46.520 to watch here at Bloomberg. I was struggling, honestly to 0:07:46.520 --> 0:07:49.440 figure out exactly where the headquarters of Xai are, Like 0:07:49.560 --> 0:07:52.040 very basic stuff, right, I mean, well, we know they 0:07:52.080 --> 0:07:54.640 have an office in Palo Alto. I think they list Austin, 0:07:54.680 --> 0:07:57.520 Texas as their official headquarters on some documents, but then 0:07:57.560 --> 0:08:00.480 they were you know, created in Nevada. So it's like 0:08:00.840 --> 0:08:03.760 even just the basics around where this company exists are 0:08:03.800 --> 0:08:06.160 not always clear, which sort of gives you a flavor 0:08:06.200 --> 0:08:08.360 of sort of how they operate. But I think in 0:08:08.440 --> 0:08:10.400 terms of like what does this look like? You know, 0:08:10.440 --> 0:08:11.960 to go back to what Sarah was talking about, just 0:08:12.000 --> 0:08:14.080 about the broader stock market and how it impacts Elon 0:08:14.160 --> 0:08:17.920 in particular, this is someone whose vast majority of his 0:08:17.960 --> 0:08:20.720 wealth is tied up in Tesla, which is therefore dependent on, 0:08:20.960 --> 0:08:22.840 you know, the success of that stock and the broader 0:08:22.880 --> 0:08:25.600 stock market. When things go down, he doesn't have the 0:08:25.640 --> 0:08:29.400 liquidity that he needs or wants to do all these 0:08:29.440 --> 0:08:33.240 other projects that he has right boring company Xai even 0:08:33.920 --> 0:08:35.880 x And we saw this play out when he tried 0:08:35.880 --> 0:08:37.640 to buy Twitter a few years ago, right the stock 0:08:37.640 --> 0:08:40.199 market went down at the worst possible time for him, 0:08:40.200 --> 0:08:42.680 and what happened. He spent all summer trying to fight 0:08:42.720 --> 0:08:44.560 to get out of that deal. So I think he 0:08:44.679 --> 0:08:48.320 is more susceptible to a stock market decline than most 0:08:48.440 --> 0:08:50.720 simply because of all these other endeavors he has going 0:08:50.760 --> 0:08:53.080 on and the fact that he needs his Tesla wealth 0:08:53.480 --> 0:08:57.000 to sort of either fund those directly or use those 0:08:57.280 --> 0:09:00.160 Tesla shares as collateral to get money for these their 0:09:00.200 --> 0:09:01.280 businesses that he's running. 0:09:01.960 --> 0:09:04.840 The thing that I find like most striking about this 0:09:05.080 --> 0:09:08.040 is just that, you know, open Ai, which is widely 0:09:08.080 --> 0:09:10.319 regarded as like the most successful of these companies, there 0:09:10.320 --> 0:09:12.600 are reports coming out that it is running short on cash, 0:09:12.640 --> 0:09:14.080 that it is going to have money, that it may 0:09:14.120 --> 0:09:16.640 even have trouble raising money. So you do wonder what 0:09:16.720 --> 0:09:18.360 does it mean. You know, what does it mean for 0:09:18.400 --> 0:09:21.880 Elon Musk? And on that note, the big news are 0:09:21.960 --> 0:09:23.800 one of the big pieces of news in Elon Land 0:09:23.920 --> 0:09:26.200 is that is a feud watch story. The open Ai 0:09:27.040 --> 0:09:29.760 x feud is back on right Sarah. 0:09:29.320 --> 0:09:33.560 There is another lawsuit that Elon Musk flung their way. 0:09:34.200 --> 0:09:37.720 It's just the continuation of this class we've talked about 0:09:37.720 --> 0:09:41.320 for months between Elon Musk and Sam Altman. He was 0:09:41.480 --> 0:09:46.200 one of the original founders of open Ai, funded a 0:09:46.240 --> 0:09:49.440 lot of the initial capital that was back when open 0:09:49.480 --> 0:09:53.200 Ai was supposed to be more of a nonprofit. Obviously 0:09:53.240 --> 0:09:56.880 they've gone the for profit direction. Musk is upset about that, 0:09:57.040 --> 0:09:59.439 but look, on the other hand, that's what he's doing 0:09:59.520 --> 0:10:01.480 with his own business. He's trying to build a for 0:10:01.640 --> 0:10:07.199 profit AI operation. So is this real legal problem or 0:10:07.360 --> 0:10:10.840 is this more trying to stall to buy time to win. 0:10:12.320 --> 0:10:15.880 Some fantastic writing in this complaint, The perfidity and deceit 0:10:15.960 --> 0:10:17.599 are of Shakespearean proportions. 0:10:17.880 --> 0:10:20.400 That was an improvement I think from the previous complay. 0:10:20.160 --> 0:10:20.520 Right, Kurt. 0:10:20.679 --> 0:10:22.600 I was reading about it this morning as well, trying 0:10:22.600 --> 0:10:25.800 to understand exactly what's different this time around, Right, because 0:10:25.800 --> 0:10:28.480 as Sarah and you pointed out, maxis is now the 0:10:28.480 --> 0:10:31.720 second lawsuit that's come about, and it's not entirely clear. 0:10:31.720 --> 0:10:33.320 I mean, it sounds like maybe they've honed in on, 0:10:33.360 --> 0:10:36.080 like the very specific stuff that they're claiming open Ai did, 0:10:36.200 --> 0:10:39.320 and so we'll see what ultimately happens. But I feel 0:10:39.360 --> 0:10:41.760 like now that he has a competing AI business of 0:10:41.840 --> 0:10:45.040 his own in X dot Ai, it's very you know, 0:10:45.240 --> 0:10:48.880 coincidental timing that he is suddenly taking this very aggressive 0:10:48.920 --> 0:10:52.600 stance and approach to open Ai, which, as Sarah pointed out, 0:10:52.640 --> 0:10:54.560 he's had a relationship with for a very long time. 0:10:55.240 --> 0:10:57.960 Let's leave the world of AI and markets and pivot 0:10:57.960 --> 0:11:01.680 to X A lot happening, oh for the weekend on Sunday, 0:11:01.960 --> 0:11:07.120 Elon Musk sort of started inserting himself into a conversation 0:11:07.200 --> 0:11:10.480 that's been kind of happening on the right, not just 0:11:10.480 --> 0:11:13.360 on x but on other social networks. Following me violent 0:11:13.800 --> 0:11:17.480 knifing attack in Southport, England, there was a lot of 0:11:17.520 --> 0:11:20.960 misinformation in the wake of that attack and implying that 0:11:21.040 --> 0:11:24.760 the attacker was either an immigrant or a Muslim or both. 0:11:24.920 --> 0:11:26.040 None of those things were true. 0:11:26.640 --> 0:11:30.679 There was violent rioting across the country and Elon Musk 0:11:30.760 --> 0:11:33.880 kind of threw himself into the middle of that, responding 0:11:33.920 --> 0:11:37.439 to a video that showed some of some of the rioting, 0:11:37.760 --> 0:11:42.719 saying civil war is inevitable, Sarah, what is going on? 0:11:43.559 --> 0:11:48.080 The riots in the UK are almost completely based on 0:11:48.559 --> 0:11:52.880 this flood of misinformation, much of it originated on telegram. 0:11:52.920 --> 0:11:54.880 But then this is the kind of content that is 0:11:54.960 --> 0:11:59.280 rewarded on X and by Elon himself. It's this anti 0:11:59.360 --> 0:12:04.080 immigrant mint. Even though authorities in the UK I have 0:12:04.200 --> 0:12:09.920 identified the person who stabbed those children as a UK citizen, 0:12:10.559 --> 0:12:16.040 all of the sentiment is you know, anti immigrant, anti foreigner, 0:12:16.600 --> 0:12:21.480 and resulting in these terrible riots all across the country. 0:12:21.920 --> 0:12:26.320 And really we haven't seen the platforms say or do much, 0:12:26.440 --> 0:12:29.320 not just X we haven't seen you know, Meta come 0:12:29.320 --> 0:12:31.120 out with a statement. Correct me if I'm wrong, Kurt. 0:12:31.120 --> 0:12:35.360 But the difference for Elon is he is actually personally 0:12:35.760 --> 0:12:39.840 fueling these ideas. He is responding to some of the 0:12:39.840 --> 0:12:43.760 conspiracy theorists, he's fueling some of the some of the 0:12:44.080 --> 0:12:46.040 racist language on the site. 0:12:46.600 --> 0:12:49.400 You have UK authorities saying, hey, listen, this is like 0:12:49.440 --> 0:12:53.880 people responding to misinformation and people really need to like 0:12:53.960 --> 0:12:56.640 settle down because it's leading to real violence. And instead 0:12:56.640 --> 0:12:59.400 of responding by trying to tone it down somehow, he 0:12:59.440 --> 0:13:02.800 tweets he legitimizes the violence, says this is this is 0:13:02.800 --> 0:13:03.439 the beginning. 0:13:03.200 --> 0:13:03.960 Of a civil war. 0:13:04.080 --> 0:13:07.360 I mean, extremely kind of edgy, you know, bordering on 0:13:07.880 --> 0:13:10.679 at least as authorities in the UK see it irresponsible. 0:13:11.280 --> 0:13:14.959 No, absolutely, And I think that this is like interesting 0:13:14.960 --> 0:13:17.400 in the context of another video that we saw today 0:13:17.400 --> 0:13:21.000 from Lynda Yakarino, where she is saying that X's is 0:13:21.040 --> 0:13:23.840 a victim here because none of the advertisers, they're all 0:13:24.200 --> 0:13:27.240 they're all conspiring against the platform and deciding not to 0:13:27.280 --> 0:13:30.719 put their money there and infringing on free speech. This 0:13:30.760 --> 0:13:34.120 is the kind of thing that advertisers don't want their 0:13:34.160 --> 0:13:37.120 promotions by and they know that this is toxic content. 0:13:37.200 --> 0:13:39.520 They know that this is leading to real world violence, 0:13:39.840 --> 0:13:41.559 and they don't want to be associated with it. 0:13:45.280 --> 0:13:48.360 I want us to do a new segment called Feud Walls, 0:13:48.640 --> 0:13:52.079 which is our feud watch for the Democratic vice presidential 0:13:52.120 --> 0:13:55.880 nominee Tim Walls. Kurt, what are the chances of a 0:13:56.000 --> 0:13:59.400 feud with Walls breaking out in the next seven days. 0:14:00.360 --> 0:14:02.360 In the next seven days, I'm gonna give it a 0:14:02.960 --> 0:14:06.440 ninety percent chance. I'm gonna go one hundred percent chance 0:14:06.480 --> 0:14:08.920 before the election. It's just a matter of time before 0:14:08.920 --> 0:14:12.320 Elon bans the word weird on X and says that 0:14:12.360 --> 0:14:14.719 anyone who calls someone else weird is now committee in 0:14:14.800 --> 0:14:19.840 some type of uh, you know, social accusation. That's just 0:14:19.880 --> 0:14:22.600 beyond the pale for this company. So I'm going to 0:14:22.640 --> 0:14:24.680 give it a ninety percent chance in the next seven days. 0:14:24.840 --> 0:14:26.600 I think we're gonna see it happen in the next 0:14:26.640 --> 0:14:27.400 seven hours. 0:14:28.240 --> 0:14:32.560 Like, you gotta give Wall's credit here. 0:14:32.640 --> 0:14:35.520 I mean, he's of the Elon Musk school of memory, right, 0:14:35.600 --> 0:14:39.400 he made weird happen. He's got these funny videos doing 0:14:39.440 --> 0:14:43.480 car repair like he really seems despite you know coming 0:14:43.520 --> 0:14:45.800 off as this nice Minnesota guy, he may have a 0:14:45.800 --> 0:14:49.120 little bit of poster in him. I think Kurt Sarah will. 0:14:49.200 --> 0:14:51.320 We'll be talking about this more, I'm sure over the 0:14:51.360 --> 0:14:53.200 next few months. Thanks for thanks for being. 0:14:53.080 --> 0:14:54.640 Here, Thanks for having us. 0:14:54.720 --> 0:14:55.440 Yep, thanks Max. 0:15:00.720 --> 0:15:02.880 Now we're going to go to Texas. 0:15:03.200 --> 0:15:06.560 Last week we talked about Elon's breakup with his old 0:15:06.600 --> 0:15:09.880 state California. Now we're going to dig into his romance 0:15:09.960 --> 0:15:13.800 with his new state, Texas. We talked about this earlier 0:15:13.840 --> 0:15:16.720 at the south By Southwest conference for our special episode, 0:15:16.840 --> 0:15:19.320 but we still had questions for some of our favorite 0:15:19.320 --> 0:15:22.240 Texas reporters. So I got on a zoom last month 0:15:22.280 --> 0:15:25.040 with Rachel Monroe, who covers the Southwest for The New Yorker, 0:15:25.320 --> 0:15:28.000 and Chris Hooks, who is a contributing editor for Texas 0:15:28.040 --> 0:15:29.640 Monthly and sometimes. 0:15:29.240 --> 0:15:31.360 A contributor to Bloomberg Business Week. 0:15:32.080 --> 0:15:35.160 The south By Southwest conversation was all about Elon's kind 0:15:35.200 --> 0:15:36.440 of identity as a Texan. 0:15:36.680 --> 0:15:38.880 Is he where the cowboy hat? What's his deal with 0:15:38.920 --> 0:15:39.440 the border. 0:15:39.480 --> 0:15:43.160 For this conversation, I wanted to ask Chris and Rachel 0:15:43.480 --> 0:15:47.320 how Elon Musk is changing Texas and how those changes, 0:15:47.400 --> 0:15:50.600 say you know what those changes say about the effect 0:15:50.640 --> 0:15:53.320 he's having on the wider world. His operation, just to 0:15:53.320 --> 0:15:56.120 refresh your memory, is enormous. You've got two factories in 0:15:56.280 --> 0:15:59.280 Austin or in the Austin area, one that makes cyber trucks, 0:15:59.280 --> 0:16:02.840 another one that'll make Starlink satellites. And then there's this 0:16:03.360 --> 0:16:06.840 crazy launch site in South Texas near the US Mexico 0:16:06.920 --> 0:16:10.200 border where the homes literally shake every time one of 0:16:10.280 --> 0:16:14.160 Musk's starship rockets takes off. For context, again, we record 0:16:14.240 --> 0:16:18.120 this last month, but with Elon pushing ever deeper into politics, 0:16:18.320 --> 0:16:20.680 and of course with SpaceX, you know, vuying for more 0:16:20.720 --> 0:16:22.920 government contracts couldn't be more relevant. 0:16:23.200 --> 0:16:28.160 Hope you enjoy the conversation. Rachel, welcome, Hi Max, great 0:16:28.200 --> 0:16:30.360 to be here. Chris welcome to Elon inc. 0:16:30.640 --> 0:16:31.720 Hey, guys's good to be here. 0:16:32.120 --> 0:16:35.040 Okay, So just to start, I want to talk about 0:16:35.040 --> 0:16:38.880 the geography in South Texas. Last year on the Joe 0:16:38.960 --> 0:16:42.640 Rogan podcast, Joe Rogan asked Elon Musk, Hey, how did 0:16:42.680 --> 0:16:47.360 you decide to locate your rocket site in Bocachica, which 0:16:47.400 --> 0:16:51.160 is just outside of Brownsville, And he basically said, oh, well, 0:16:51.200 --> 0:16:53.680 I spun the globe and it looked like a good 0:16:53.680 --> 0:16:56.760 place to do it. I mean, he completely dislocated from 0:16:56.760 --> 0:16:59.560 any sense of the place. But this is a place, 0:16:59.720 --> 0:17:01.680 and Rachel, can you just give us a sense of 0:17:02.720 --> 0:17:05.879 what it's like there at the SpaceX site, what Boka 0:17:05.960 --> 0:17:06.639 Chika is like. 0:17:07.600 --> 0:17:07.879 Sure. 0:17:07.920 --> 0:17:11.400 So, Bocachica, like you said, is outside the city of Brownsville. 0:17:11.520 --> 0:17:14.080 It's the very tip of Texas. It's where the Rio 0:17:14.119 --> 0:17:17.720 Grande flows into the Gulf of Mexico, and it's it's 0:17:17.760 --> 0:17:22.520 mostly surrounded by protected land, various wildlife refuges owned by 0:17:22.560 --> 0:17:26.920 the state, or the lot of shore birds and scrubland, 0:17:27.359 --> 0:17:30.800 and kind of used to be basically a neighborhood of 0:17:30.800 --> 0:17:32.760 intrepid people like this is the kind of place like 0:17:32.880 --> 0:17:35.520 the county doesn't build roads out there. You can't get 0:17:35.600 --> 0:17:37.920 city infrastructure. You have to get your water trucked in. 0:17:38.119 --> 0:17:39.639 So it was a place where you could buy like 0:17:39.680 --> 0:17:41.720 a cheap house, like a house for like fifty thousand 0:17:41.760 --> 0:17:44.399 dollars or something. It's basically, or it was for a 0:17:44.400 --> 0:17:47.520 long time, the last undeveloped part of the Texas Coast, 0:17:47.600 --> 0:17:50.399 or probably even the entire Gulf Coast, which is just 0:17:50.440 --> 0:17:53.240 dotted with refineries and industrial sites. 0:17:53.720 --> 0:17:54.560 Your story. 0:17:54.600 --> 0:17:56.560 I think called it the poor people's beach course, the 0:17:56.560 --> 0:18:00.360 poor people's beach for people in Brownsville, Chris. 0:18:00.440 --> 0:18:05.080 There's a conglomeration of cities in this southernmost part of Texas. 0:18:05.119 --> 0:18:07.760 Brownsville is one of them. Bokachka is about a half 0:18:07.760 --> 0:18:11.399 an hour maybe forty five minutes from Brownsville. Brownswelle is 0:18:11.400 --> 0:18:14.440 a poorer place. It's one of the poorer places in Texas. 0:18:14.680 --> 0:18:18.040 The major a lot of the major employers there are shipbreakers. 0:18:18.200 --> 0:18:21.760 There is an industrial field ship breakers. Ship breakers, so 0:18:22.119 --> 0:18:25.240 welders and other metal workers will take apart old ships. 0:18:25.320 --> 0:18:27.880 And before SpaceX came to Brownsville for a long time 0:18:27.920 --> 0:18:30.320 and the idea of an economic development project, there might 0:18:30.359 --> 0:18:33.840 be an old aircraft carrier gets towed around South America 0:18:33.920 --> 0:18:37.120 from Washington State and in Brownsville they break it up. 0:18:37.560 --> 0:18:39.399 It had been a place that had felt neglected for 0:18:39.480 --> 0:18:42.600 a long time. One thing they did have was access 0:18:42.680 --> 0:18:47.000 to natural beauty around Bokachica. It's not necessarily a place 0:18:47.040 --> 0:18:49.360 that you know, it doesn't look like a big sur 0:18:49.840 --> 0:18:51.879 but as far as Texas goes, this is a place 0:18:51.920 --> 0:18:55.320 that is remarkable because it's been undeveloped for so long. 0:18:55.480 --> 0:18:57.560 A lot of folks in Brownsville grew up going to 0:18:57.680 --> 0:19:00.440 Bokachica Beach have fond memories of it, and it's a 0:19:00.480 --> 0:19:02.320 place that I love. I went to the Gulf Coast 0:19:02.359 --> 0:19:05.439 a lot growing up, but the geographical features of the 0:19:05.440 --> 0:19:08.200 area kind of make it remarkable. There's a big protected 0:19:08.200 --> 0:19:12.600 bay called Laguna Madre nearby where dolphins and other animals gather. 0:19:13.600 --> 0:19:17.359 The beach at Bocachica is used by the Ridley sea turtle, 0:19:17.640 --> 0:19:20.840 an endangered sea turtle. It's also a very important place 0:19:20.840 --> 0:19:24.240 for migratory birds short birds, including a lot of birds 0:19:24.320 --> 0:19:26.800 that migrate for thousands of miles and have kind of 0:19:27.080 --> 0:19:30.679 generation after generation for one hundreds thousands or more years, 0:19:31.000 --> 0:19:32.880 relied on this place to lay eggs. 0:19:33.560 --> 0:19:37.640 So you're both talking about this unusual place, a lot 0:19:37.640 --> 0:19:42.120 of natural beauty, these animals, and Rachel your story which 0:19:42.200 --> 0:19:45.240 kind of in Esquire believe was a couple of years 0:19:45.240 --> 0:19:46.720 ago that kind of told the story of how Elon 0:19:46.800 --> 0:19:49.560 got there. It opened with this quote, which is from 0:19:49.560 --> 0:19:51.679 Elon Musk, and it was we got a lot of 0:19:51.760 --> 0:19:54.040 land with nobody around it, so if it blows up, 0:19:54.119 --> 0:19:57.359 it's cool, and so like, how did Elon get there 0:19:57.600 --> 0:20:00.280 give us the kind of short version of how this 0:20:00.480 --> 0:20:04.119 kind of awesomely empty as he saw at space essentially 0:20:04.200 --> 0:20:06.520 came to be his Yeah. 0:20:06.560 --> 0:20:09.800 So, And I should say first that in describing Bookachka 0:20:09.800 --> 0:20:11.919 as the poor people's beach, that's a statement made with 0:20:11.960 --> 0:20:14.560 a lot of pride. That's not a derogatory statement. When 0:20:14.560 --> 0:20:16.720 people say that, people are like, no, this is our beach. 0:20:16.960 --> 0:20:19.040 You don't have to pay to come here. We come here, 0:20:19.080 --> 0:20:21.600 we fish, we grill, we love it, And that's a 0:20:21.640 --> 0:20:24.439 statement of ownership. And so again, of course it's not 0:20:24.520 --> 0:20:27.480