SpaceX has announced the acquisition of xAI to integrate the artificial intelligence platform with its space and satellite operations. The operation consolidates Elon Musk’s personal conglomerate or what is the same: the billionaire’s “one empire” idea.
The deal will result in an all-stock transaction that will value the combined company at $1.25 billion. with SpaceX at $1 trillion and xAI at $250 billion. It will be the largest private company in the world and an example of Musk’s ambitions on Earth and in space, as the executive points out:
«SpaceX has acquired xAI to form the most ambitious vertically integrated innovation engine, both on and off Earth, with AI, rockets, space internet, direct communications to mobile devices and the world’s leading platform for real-time information and freedom of expression. This marks not only the next chapter, but the next book in SpaceX and xAI’s mission: scale to create a conscious sun that understands the universe and extends the light of consciousness to the stars..
Musk took advantage of the announcement to reaffirm his vision that orbital data centers They could become the cheapest way to scale AI computing in two to three years. The executive proposes a scenario that involves the launch of “one million tons per year” of satellites, with the objective of achieving about 100 kW of computing per ton through a project to put approximately 1 TW/year of computing into orbit.
The vision is very ambitious, like all of Musk’s, but it still depends on multiple advancesespecially around the cadence and cost of satellite launches, solar power generation, hardware maintenance and servicing at scale, among others. It remains an unknown whether SpaceX can overcome these obstacles quickly enough for the “computing in space” be economically attractive.
Elon Musk’s personal conglomerate
The merger of SpaceX and xAI confirms Musk’s ambitions to create the world’s largest example of a personal conglomerate and shows what the world can be. goodbye to the era of corporate conglomerates. Aerospace, energy, health, automotive, technology, communications, media… Thirty years ago, we would talk about General Electric. Today, we talk about Elon Musk.
Beyond his highly controversial political activity alongside Donald Trump, his support for extremist options and narratives on both sides of the Atlantic or the controversial activities of his AI, the richest person in the world is a reference character (for better or worse) in today’s world. SpaceX CEO Tesla xAI owns telecommunications company Starlink, social media platform X, energy company SolarCity and advanced health research firm Neuralink.
Musk has frequently been compared to Henry Ford. A more accurate comparison would be with John D. Rockefeller or Jack Welchwho transformed General Electric from a failing industrial company to an expanding conglomerate. The comparison with Welch is particularly valid with the announcement of the merger of their companies. And it will not be the last, because we are talking about Tesla.
The similarities are not that broad. GE was a company and Musk is a person. But the distinction may be a little blurry in an era when his net worth eclipses the 97% market capitalization of the S&P 500. In fact, Musk’s net worth is close to 800 billion dollarsalmost as much as GE at its peak, adjusted for inflation.
GE was often inseparable from its chairman, Jack Welch. Musk, as an individual, captivates many of his colleagues, as does Welch. Today’s executives talk about being “extremists” and defend the “principled thinking”just as CEOs of the 1980s attempted to emulate Welch through “accretive” mergers and mass layoffs. Aside from sharing ownership or leadership of Musk, interaction between his multiple companies has been limited until recently.
From ‘The Everything Company’ (GE) to the idea of ’one empire’ (Musk)
Not long ago GE was the most valuable company in the world, with divisions that made light bulbs, jet engines, appliances, X-ray and ultrasound machines, steam turbines, locomotives and television shows, among dozens of other things. When Welch took the reins at GE in 1981, he inherited a company adrift, having lost a fifth of its market capitalization in the previous decade. His first measure was to cut staff. In fact, he laid off so many employees —more than 100,000 in its first years— which became known as “Neutron Jack”, in reference to the neutron bomb, which eliminates people without affecting buildings.
With the savings, Welch set about acquiring one company after another. Many manufactured products similar to the businesses that GE already had, but others did not, such as NBC, which Welch bought in 1986. This was added to the portfolio to expand the company’s influence, the same as Musk has done with the purchase of Twitter.
During his tenure as GE chairman, Welch was revered for his management skills, and rival CEOs emulated his style. The company’s management training program matched that of top business schools, and several of its protégés went on to run Fortune 500 companies. Through a relentless series of layoffs and acquisitions, Welch turned GE into a money printing machine. The company grew from $14 billion when he took over to more than $400 billion when he left in 2001. Dividends to shareholders have only increased.
But Welch’s approach was not foolproof.. In 2001, his last year at GE, the company’s stock Price fell. By the time the 2008 financial crisis hit, it was clear that the company’s conglomerate structure hid serious flaws. When it became clear that GE Capital was immersed in questionable financial instruments, the fractures in the business model deepened. GE Capital was eventually bailed out by the federal government with $139 billion, but the success fizzled out. Five years ago, GE announced it would split into three independent companies. The conglomerate disappeared.
Comparisons with Elon Musk
In addition to Welch, Musk might have another comparison a little further back in history, before GE became the prototypical conglomerate. “I think it’s more a story of a robber baron than a GE conglomerate”he told TechCrunch David Yoffie professor at Harvard Business School.
In the Gilded Age, people like JP Morgan and John D. Rockefeller controlled large, powerful companies that built new industries, such as railroads and oil companies. They controlled these companies directly or through positions on the board of directors over which they exerted their influence, and they could combine companies as they pleased.
“I think that’s very much the approach Elon is taking.”Yoffie said. “It’s more about ego, the power of the market and trying to be the one who decides”. Much of the power of the “robber barons” the Harvard professor talks about came from two sources: their enormous wealth and the lack of regulation at the time.
«Today, obviously, we live in a much more regulated world, but also in a world where regulation is being reduced and, therefore, is increasingly less restrictive». What ultimately happens to Musk and his empire will depend both on the direction he decides to take—merge his companies or keep them separate—and on How society responds to its growing power which includes known political interference in American and foreign elections, promoting far-right options.
Elon Musk’s personal conglomerate may take shape if he continues to merge his companies, although the biggest limitation for Musk’s companies could be regulation, which ultimately depends on public opinion. The magnates of the late 19th and early 20th centuries saw their power finally curbed by a wave of new regulations introduced in the Progressive Era. Musk has a gift for embracing visions of the future that capture people’s imaginations and translating them into business plans. The question is: how long can he maintain this pace and whether he has not already gotten into too many puddles outside his business activity.
