Elon Musk’s SpaceX is worth $700B

I am listening to the new Elon Musk Book on Audible. It is quite thrilling. One thing that stuck me hard is the logic for deriving the “value of SpaceX”. In an email sent during June 2013 to all employees on the subject of ‘SpaceX IPO’, Elon said SpaceX would be valued at least $4–5B (as on June 2013).

Here is a company that not just builds rockets, but also the only company that has stated plans to explore Mars. And, not just that, its planning on colonizing Mars. Compare SpaceX to the so called unicorns like WhatsApp (sold for $19B), Uber Taxi App (valued more than $50B) and others. This striking difference tells me how much we have become ‘tunnel visioned’ into the financial methods to value a company. I am not saying financial methods are bad. We surely need them, but seeing something like SpaceX through the same blue glass is flawed.

I looked at SpaceX value differently. SpaceX is like insurance for the entire humanity. If something happens to our planet, we need a backup. And, SpaceX is the only company that is even thinking of putting man on Mars. Today we have roughly 7.2B people on this planet and if everyone has to pay $10/year insurance, that is simply $72B in revenue and $700B in valuation using a simple 10X multiple.

Of course my thinking has terrible flaws. My mind finds much more comfort thinking this way, given what it takes to build a company like SpaceX.

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