As AI companies race to go public, who else will get on board?

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

Despite its name, SpaceX has been emphasizing the potential of its expensive AI business, and rivals OpenAI and Anthropic may be pursuing their own public markets. So on the latest episode of TechCrunch’s Equity podcast, Kirsten Korosec, Sean O’Kane, and I discuss what looks like a hot summer for IPOs.

“Not only do we have SpaceX raising a large amount of money from the public markets, but we’re also under pressure to test the limits of how much a public company can be and how much it can be controlled by one person,” Sean said. “My eye is on the other tech companies that will go public and how much they will try to emulate.”

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

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

Read on for a preview of our interview, edited for length and clarity.

Anthony Ha: I want to back off just a little bit on the SpaceX IPO, because beyond Elon Musk of everything, it’s the beginning of what could be [series] of different IPOs of different AI companies. We talked about Anthropic filing for bankruptcy to go public, 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 perfectly. It’s a good topic, so I’ll read it here: “It’s not FAANG anymore, it’s MANGOS.” FAANG from Facebook, now Meta; Amazon; An apple; Netflix; Google, now Alphabet.

Now it has changed, and we have Meta, Anthropic, NVIDIA, Google, OpenAI, SpaceX. [We’ve still got] Big tech companies, sure, but there’s a change here, right? First, we have a bunch of AI labs there, and that’s very different. Netflix is ​​out there, a major streaming service. So for me, it’s an interesting change in terms of public markets and a lot of money and money coming from public markets from consumers. [and] social networks and, in particular, 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 than any other summer in a long time.

Sean O’Kane: You know, I once wanted to be a lawyer, one of the reasons I didn’t was because I hated the paperwork that would be involved. And here I am looking forward to reading the hundreds more SEC pages filed this summer – talk about a sea of ​​reads.

The moment we have been waiting for a long time. We’ve spent the last few years wondering if the IPO market will quote-unquote “open back up” after so much hype about the private markets, and the teasing of people accessing their series like. [whatever] fundraising cycle. This is a good stress test – I mean, “good,” take that word if you want – a good stress test for the public markets in general.

Not only is SpaceX absorbing huge amounts of money from the public markets, but we are also under pressure to test the limits of what a public company can be and how much can be controlled by one person. My eye is on what other tech companies will come forward with and how much they will try to emulate.

The thing I keep saying and thinking about SpaceX is, they’re really trying to take some of the worst aspects of Google and Meta’s original IPOs in the early 2000s and combine it with that “We’re going to lose money forever” thing with Amazon. And I’m curious to what extent Anthropic and OpenAI will try to do the same. Will they remake themselves in the image of SpaceX? Or will they try to position themselves in another way?

Anthony: One aspect that was really driven home as I read about the OpenAI IPO is the quality of some of this which is a bit of a race against time. I think we can say with confidence right now, SpaceX is starting out of the gate, which may have its pros and cons. It’s also a different company because it bills itself as an AI company, but it obviously has a lot of other things going on, too.

But there is a sense in which, at least according to some analysts, OpenAI and Anthropic may both want to go ahead of the other, because there is a limited amount of capital, a limited amount of interest. At some point one of these measurements should begin to retreat to Earth, so both may be in a rush to be the first.

Kirsten: I mean, there’s a lot of racing between Anthropic and OpenAI. You even see OpenAI talking about reducing prices, and they will certainly be competing on the IPO calendar. But that’s too short-term thinking. If they are smart, they should be more concerned about the long-term play here.

To me, what’s really interesting is that while Anthropic, OpenAI, and SpaceX are all gearing up for these times, there are plenty of other companies raising money after the success of companies like SpaceX, or going into SPACs. Just today, for example, even as we’re recording this, a company called Quantum Space is doing a SPAC and they’re totally trying to ride that SpaceX IPO wave.

We’ve got a bunch of other startups that our reporter Tim Ferholz has clearly reported on – they’re not going to be public, are they? But if SpaceX succeeds with space data centers, they’re raising money for what’s possible and building businesses for what’s possible. So there’s a ripple effect that’s happening throughout the market that I think is probably more interesting than just the headline, “SpaceX makes Elon a billionaire.”

Sean: A commonly held view in Silicon Valley is that AI is revitalizing the economy, but for its own sake use it. AI in fact already reshaping the economy – just because of how people are trying to build it. We have everything you just described, we have these other companies that are rushing to the public markets. And I think that’s a really good point to think about: Will they ever regret rushing into the public markets?

But we have companies like Ford and General Motors using their ability to create unused batteries to power data centers. And Ford’s stock soared when it announced what is a good-looking energy storage business, compared to something like Tesla. And Tim De Chant had a really good series of stories this week about the GM pivot, too.

The economy has already been remade. Whether that lasts, again, is the question, but it is happening right now.

Kirsten: That’s actually a really good point, because for me, I want to say five, six, seven, eight years ago, there were all these articles of “the next Tesla killer” and these car manufacturers and other companies are still rushing around trying to revive all these different businesses, and especially business strategies based on Elon Musk. They haven’t learned their lesson yet.

I wish I could communicate with the automaker management about this: I get that you have a lot of unused batteries and you want to turn to something else, but you try to model your business after Tesla or SpaceX and others, it doesn’t always work. Maybe look elsewhere.

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

Kirsten: No, it shouldn’t. But just look. This will happen.