Bezos vs. Musk: The Atlantic breaks down the four-rung ladder to vertical integration of the space economy

Speaker 3: Bezos? We'll figure it out with Josh. Welcome to the show.

Speaker 2: Hey, guys. How are you? What's going on? Dude, I'm I'm envious that you get to work with Mike Isaac.

Speaker 3: Oh, yeah.

Speaker 11: I... I'm very excited. I've been trying to work with Mike for like fifteen years.

Speaker 2: There you go.

Speaker 5: Oh, here

Speaker 2: you go. You made it over.

Speaker 3: Very cool. How'd you get started on this particular beat? How long have you been writing about space, writing about Musk, writing about Bezos, etcetera? Give us

Speaker 11: some background. So I, you know, I used to be the editor of Bloomberg Businessweek and the chief content officer there. So I I've been dealing with technology and business for a long time. Yeah. In '20... End of twenty twenty three, I started writing a column about AI for the Washington Post. And I I just took it on for a year because I don't want to be a columnist. But AI was happening, and they really needed somebody who could kind of step in and explain to normal people, like, what is this? And I've been covering AI ever since and trying to cover it in ways that are different from the sort of standard beat reporting. I don't really care about startups and their valuations. I don't think most people do. I care about what the tech does. Yeah. What it might do. Yeah. I care to some degree about the representations being made by the founders Sure. And the and the hyperscalers, and the and like the the frontier models. Yeah. So I like practical applications. I like seeing what it'll do. I didn't originally intend that... You know, I didn't even know when I started thinking about this story that it would, of course, as with all things, end up back in AI land. But it did. Yeah. And so I guess I feel qualified

Speaker 2: for Well, isn't that sort of the nature of the... Of life in 2026 where everything...

Speaker 3: Yeah. Like you can be a sports podcast and you still have to talk about AI at least a couple times a month because there's some some crossover.

Speaker 2: Yeah. Or even like the health... Every health podcast Yeah. Like just ends up having... Stuff. Yeah.

Speaker 11: Yeah. It does.

Speaker 1: And and

Speaker 11: look, I think that part... That is part of the reason ordinary people are exhausted Totally. By the subject. Right? Yeah. Is that they're just like, do I need to hear about this everywhere I go?

Speaker 3: Yep.

Speaker 11: Also, look, part of the reason that I like doing what I do is that I feel like there's a a very unfilled bit of white space, which is actually explaining both how the tech works and looking past these kind of like statements that, you know, when I was a columnist the first eight weeks, the number of times I heard the following phrases, and you guys are very familiar with this. AI is going to cure cancer, and it's going to mitigate climate change.

Speaker 3: Yeah.

Speaker 11: And then by the fifth time, you're like, say more. Yeah. Tell me tell me what that means so that we're not just dealing with this kind of like, you know, level of bullshit that people have wash over them. And at a certain point, you're like, I don't believe anything you say.

Speaker 3: Step one is we all smoke cigarettes because then we have to cure cancer. That's

Speaker 2: what I'm hearing. Create the incentive. Yeah.

Speaker 3: Exactly. I... If you make AI cure cancer cancer claim, you have to smoke a cigarette on the spot.

Speaker 11: Right. That would be a good way to at least

Speaker 3: get it Yeah, back to exactly. Okay. Well, let's go over to the space economy. I think most people are familiar with like the Musk vertical integration strategy. SpaceX has been widely talked about forever. He's very noisy. We know Starlink is available on planes now and he's going direct to cell and he's going to put the data centers in space. The Bezos side of the story feels not not like it's a secret, but it's just less discussed because Bezos is a little bit less noisy than Musk. But he's been taking this very seriously for just as long as Elon. But can you break down what the Bezos space empire will look like, currently looks like, what's real, what's promised. What what do you see over in that world?

Speaker 11: Yeah. Look. I mean, Bezos is actually... Blue Origin started two years before SpaceX.

Speaker 3: Yeah.

Speaker 11: So Bezos had a head start. Yeah. The fir... I can tell you the first twenty years of the company's history really boils down to just they took two very different paths. Mhmm. Bezos, you know, had Amazon when he started Blue Origin. And he founded Amazon with his head, and he founded Blue Origin with his heart. Mhmm. And so he really... He allowed it to kind of drift a

Speaker 3: little bit. Mhmm.

Speaker 11: And it was described to me by a former senior NASA official who visited both of those companies in their adolescence. This person said, look, Blue Origin was an academic lab. Right? It was like a science project. They had beautiful three d printers and beautiful buildings, but nobody was working. There's like no energy there. Whereas this person went over to to SpaceX and it's like everybody was dirty, everybody was young, they were sleeping in the office. And that's a product of the fact that Elon just didn't have as much money as Jeff. Yeah. And he basically said, you got to eat what you kill, and I don't mind losing it all if on the on the chance that we actually win. Yeah. And so they moved very quickly. Blue Origin for years, Jeff just was not fully dedicated to it. That gets us really up to the the current day where SpaceX is responsible, as you guys probably know, for 80% of what was launched in the world in 2025. And the next closest competitor is the Chinese government.

Speaker 3: Yeah. So blue origin is that. And Mhmm. It feels like dominant margins and economics. It feels like a monopoly business, and yet there might not be a structural monopoly like a network effect there. So it feels like something that another company, Blue Origin or someone else could actually go after, get market share and get some of that margin if that's possible. So is this a your margin is my opportunity all over again?

Speaker 11: It's a little bit of that. It's also that the race is about to change. Right? Okay. So the first twenty five years is about lowering launch costs Yeah. Which Elon has successfully done. Yeah. And then covering your other costs by having a business like Starlink. You know, launch is not a great business. Yeah. High risk. Small. Very expensive. Boring old telecommunications is a fantastic business.

Speaker 3: Yep.

Speaker 11: That's where you get Starlink. And and obviously Blue Origin and Amazon are now in their own satellite race. Yeah. So if you think about the... There are four steps on the ladder of vertically integrating all of this stuff. Mhmm. Those are the first two. They're pretty well established. SpaceX is ahead. The next two are where things change. Mhmm. Okay? Number three is data centers in space. You guys have covered it. I know that a a lot of your listeners and viewers are aware of it. But basically, the compute costs dealing with NIMBYism on Earth, dealing with energy costs, the fact that it can be throttled at any point and it's highly competitive, make data centers in space not only logical, but by some people who I reported on, They feel like it's inevitable that we're five to seven years away. Mhmm. And of course, because this is a ladder, if you don't have launch, your ability to have data centers in space is going to be really problematic. There's a reason that a year and a half ago, Sam Altman mused about the fact that maybe OpenAI needs a space company and tried to buy Stoke Space, which is a startup, very successful. Yeah. Didn't end up doing it. But if you don't have a launch, you have issues.

Speaker 3: Yeah.

Speaker 11: So that's the third rung. And the third rung is yet to... We... We've yet to figure out who exactly is going to be able to deploy and build these data centers in space. Both Blue Origin and SpaceX have big plans for it, as you saw in the SpaceX Perspectus. That's really what they expect to make most of their money on.

Speaker 3: Mhmm.

Speaker 11: The fourth rung is AI models on earth. Right? Which we all know how people are imagining the financials around them. The number one issue is the throttling of compute. If you can't compute, you can't build and fine tune new models. You can't have inference. You can't service people's products. So the ability to have unfettered compute depends on satellite infrastructure and launch. And then your ability to build out your model becomes very different. Yeah. The other thing that's different between these companies is what the AI models themselves do. Elon has largely invested in Grok, which is basically an LLM infrastructure. It may at some point change, but that's what it is. Bezos wants... Bezos has a project called Prometheus, which like Blue Origin, he kept very, very secret. Mhmm. And then last year, sort of came out of the closet on it, and he's the co CEO of Prometheus. So he has an operational role in the company. And Prometheus is, you know, it's... The closest thing to compare it to is a real world model. It's a world model in which physical data makes up most of the model. He refers to it and others as an artificial general engineer. Mhmm. What they mean by that is that it's trained on physical data in the world and tries to make physical things from that data. Tries to model things that are really hard to model. The end game, if you believe we will get there, is a machine that makes machines. And if you're Jeff Bezos, and you own Amazon, and need dexterous robots everywhere, and you have plans to colonize the moon, and you need all sorts of machinery there, It makes sense that that's the kind of AI you would be going for. So the two of them, that's what they're both aiming for is this flywheel where everything leads to everything. Now the other thing that that does is if you don't have launch capability, you're out of the game. So... And so it's... At some point, if this space economy becomes real, inevitably there will be scrutiny around non competitive practices because they'll have lockdown on it.

Speaker 3: Yeah. But there's a lot of hyperscalers that don't have launch capacity, but they feel like they've like sort of dipped their toe in. I'm thinking of like that solar plane that Meta was working on maybe a decade ago or Google had a balloon project and Sergey Brinz built a big blimp and like there's little experiments that are happening and I'm wondering if there's rumblings of, you know, are we gonna hear about Meta and Google and maybe Microsoft and maybe NVIDIA saying like we like we we we... Well, at least one of us is like going for it and we're going to try and partner up with a Rocket Lab or Stokes space and really get into launch.

Speaker 11: I mean, maybe. The problem is how far behind even Yeah. Blue Origin is. Right? Yeah. Totally. I went to watch a Blue Origin launch in April. It was lovely. The mechanics of the rockets are gorgeous. Very brilliant people there. Right? It was the third time they had reused a booster. And as we discussed, like reusable... Reusability is the key to the whole You drive the the cost to get of kilos to space. They celebrated. Was the third time. And as I was driving away, I opened X, and Space X very casually posted they had just reused a booster for the six hundredth time.

Speaker 3: Wow. Yeah.

Speaker 11: And so it's 600 to three. Yeah. And Stokes Base and Rocket Lab. All these places are really smart. They're really Yep. But that's an indicator of how far behind they are. And so if you're Google and you're thinking, hey, we ought to get into rocketry. Well, call me in twenty five years.

Speaker 3: Yeah. It really does take that long.

Speaker 2: Well, and they also own a bunch of SpaceX. Do they not? Yeah, they do. So they've been they've been sort of like at least developing Benefit. A financial relationship for a while. I wanted to... Yeah. What what what is your view on this sort of how... I I imagine talent flows were very one directional over the last twenty years where people would be at Blue Origin. They'd be like, I wanna work on space. And then they'd realize like, I don't know what my equity is worth and like, it seems like SpaceX's valuation sort of tends to go up every few years and I can sell some shares and it's more tangible. Now, Blue Origin's raised outside capital. They have a new valuation. I imagine that they're gonna need to start making, like very very serious offers to try to peel people away from SpaceX back to back to Blue Origin in order to catch up in a bunch of different ways. But what are you seeing?

Speaker 11: Yeah. I think that's alright. I also think that these are tribal companies in ways that... Some of it is endemic to the space industry. Like, are very... It's a really interesting subculture. These are very sweet, smart people. Right? These are... Even low down the chain, you're dealing with people who have a sophisticated understanding of science. They really love what they do. They're very invested in space. They dream science fiction dreams. Right? And so they are tribal in that way. But you can't help but be at one of these companies and constantly track how the other companies are doing. And so people have gone back and forth, but not as much as you might think. Now that the money is out there and that... There's some there's some people at SpaceX who are ready to go. They've been working for it. They got their equity moment. They're ready to roll. But I don't think it's as cut and dry as other other businesses that are comparable like where, you know, an AI researcher might defect for a certain amount of money. One, the money isn't that size. Right? It's still... It's good money, but it's not like AI researcher money. And two, they're they're often in different places and they're... These are much more community oriented companies. So I don't think that that Blue Origin is gonna get there simply by rating talent.

Speaker 3: Yeah. Yeah. It's interesting. Yeah. You can't really just like take everything with you in the same way you can with an AI research project where you kind of know, oh yeah, there's this one pitfall in how you train the model. I'll take that over to another lab and immediately we'll jump. A lot of these things are like industrial processes that build up over years and years and years. And yeah, you might know, hey, we need 25 more machines over there, but that takes time to build and takes time to organize.

Speaker 11: It does. And the other thing that's interesting about it is that, you know, it's incredibly collaborative between the sort of theoretical space side, the physical engineering side. And so it it's it's a kind of different type of person. And so you are knitted into your environment in ways that are much different than technology or software engineering.

Speaker 3: Yeah. Last question. Is Jeff Bezos as space pilled or like excited about space as Musk? I mean, Elon has been talking about going to Mars. We got to get multi planetary. It's existential. Earth could get wiped out. And he's been excited about space for so long. Is Bezos equally excited and just less outgoing about it? Yeah. Okay.

Speaker 11: Listen, the the the difference in their personalities may be attributed to lots of things. But one thing that I... The people I spoke to said, look, Jeff's a little bit older. Mhmm. And so his view of business was really formed by being a D. E. Shaw. Yeah. Which is you keep your secrets close. Yeah. You don't talk about your failures or your passions. Yeah. You produce your results on the field. Sure. Elon's just young enough to really like love social media. To have almost no inhibitions about what he says out loud.

Speaker 4: Yeah. But

Speaker 11: all the people that I spoke to said, Jeff, you know, listen. His high school girlfriend told reporters when Amazon was first happening, the reason he was trying to get rich was so that he could go to space. And I think what he's been doing all these years is real.

Speaker 4: Yeah.

Speaker 11: I did not speak to him for this piece, but the number of people I spoke to who mused about the fact that he really wished he could have left Amazon earlier to focus on Blue Origin was significant. Mhmm. And I think he's trying to make up for a lot of lost time Sure. Because he loves space as much as Elon, if not more.

Speaker 3: Interesting. Fascinating. Well, if you see Mike Isaac, give him a banana from us. We I'm coming out to see him next week. Fantastic.

Speaker 11: I might try to expense more than a banana but There we go. If you guys want

Speaker 2: to keep Yeah. Make sure he's eating because he'll just go he'll he'll just go black coffee all day and we just want him to be...

Speaker 3: You know what? That's me too. So maybe we'll

Speaker 11: just find the finest black coffee we can and sit there and admire each other.

Speaker 3: Well, thanks

Speaker 2: so much. It was great to meet Josh.

Speaker 3: Have a good rest guys. We'll talk to

Speaker 2: you again soon.

Speaker 3: Goodbye. Cheers. Up next, we have Ada Baradari from D Valence coming on to talk about what you need to do to stop unapproved audio recording in and around you. We'll talk about how to fight this. Boom.