Elizabeth Lopatto | The Verge

SpaceX in your index fund, explained

2026-07-20T17:12:45-04:00

AUUUUUGH | Image: Cath Virginia / The Verge, Getty Images

Index funds are touted as one of the safest ways to invest. Rather than picking and choosing individual stocks, index funds let you bet on the market as a whole. So what happens when a company like SpaceX — a giant gamble, and, in my opinion, terribly overpriced — is fast-tracked into the Nasdaq-100? Does it suddenly threaten the stability of index funds based on the Nasdaq-100? Can a $1.77 trillion IPO crater the retirement funds of regular people who would ordinarily have no interest in investing in Elon Musk’s meme stock?

The answer has less to do with SpaceX and more to do with index funds — how they work, their history, and why they’ve been treated as one of the least risky ways to interact with the stock market. So I talked to Burton Malkiel, one of the people most responsible for the rise of the index fund.

“If I were buying individual stocks, I would think twice about buying SpaceX, which is tremendously overhyped,” he tells me. But SpaceX isn’t a reason to avoid index funds, he says. To explain why, here’s a dive into index funds, how SpaceX interacts with them, and how it all might play out.

What is an index fund?

An index fund is an investment vehicle that seeks to match a specific market benchmark, such as the S&P 500 or the Nasdaq-100. It was popularized in part by Malkiel’s 1973 book A Random Walk Down Wall Street. The “random walk” of the book’s title means that the past prices of a stock don’t predict the future, and because it is hard to predict the future, it is very difficult to beat the overall market returns over a long period of time. For that reason, most of us might as well just invest in the overall market and trust it will increase in value as a whole. “A very small minority of stocks are responsible for the whole return, and experts can’t pick them any better than the index as a whole,” Malkiel told me.

The strategy of index fund investment has been endorsed by Warren Buffett, who has suggested that the average investor is best served by putting 90 percent of their money in “a very low-cost S&P 500 index fund.”

And they are very popular! In 2024, the assets under management in passive investing, such as index funds, outpaced that of active funds, according to Elise Ryan of State Street Investment Management.

Why are people worried about SpaceX specifically?

Shortly before SpaceX went public, the Nasdaq changed its rules for the Nasdaq-100, so that a newly public company that’s large enough can join the benchmark on its 15th day of trading. That rule change was requested by SpaceX, Reuters reported.

When SpaceX joined the Nasdaq-100, on July 7th, index funds had to buy in. Interestingly, at close on July 6th, the stock was down. There’s some structural reason for that — namely, that everyone knew the index funds would have to buy in, and so banks and hedge funds most likely did some fun trades. Index rebalancing funds made out like bandits. Finance is fascinating and full of monsters.

There’s reason to believe that the index fund buying is part of the reason SpaceX had its initial IPO pop, according to research from Harvard Business School. What’s more, SpaceX is the initial entry into indexes for a number of expected mega-IPOs. Anthropic and OpenAI are expected to make their debuts later this year.

Also, people don’t like Elon Musk.

What does the index fund inclusion mean for SpaceX?

Some degree of price stability. New IPOs often fluctuate wildly. For instance, Facebook’s shares dropped 25 percent the Monday after its 2012 IPO, tripping breakers to halt trades.

Beyond the fluctuations from the market itself, a lot of people will soon be able to sell SpaceX shares that aren’t yet on the market. SpaceX employees are subjected to “lockup periods,” where they can’t immediately cash out and sell their stock following the IPO. Those periods are going to expire, and doubtless some people will want to sell shares. The index funds are likely to “help absorb some of the selling,” thus keeping the price from dipping too low, according to The Wall Street Journal.

How important is SpaceX in these index funds?

The company has a market cap of more than $1.5 trillion as of this writing, which is obviously enormous. But the IPO sold less than 5 percent of the company’s shares. Because of the way the Nasdaq adjusts its index, SpaceX will be treated like a much smaller company.

But remember, next month more SpaceX shares will be released from lockup. People with 180-day lockups can sell more shares than were initially sold in the IPO after SpaceX publishes its second quarter financial results, notes Bloomberg’s Matt Levine. Those results are expected in mid-August. That will make it more important in those index funds — though whether the price will fluctuate much is anyone’s guess, as short sellers are also anticipating the lockup releases. These market mechanics may explain some of the stock’s short-term price fluctuation, even though the company hasn’t had much major news occur.

SpaceX may take up more room in index funds as more shares are sold. But it might not, as selling usually drives down the price.

Why are people mad about SpaceX in index funds?

One big reason is the amount of power it puts in the hands of Musk. The CEO of CalPERS, an important retirement fund, and the New York state and city comptrollers sent SpaceX a nastygram about its “novel and extreme governance structure” — specifically, that only Musk decides what to do with the company and everyone else is along for the ride. Musk is temperamental, imperious, and prone to erratic behavior. That has consequences for shareholders of his companies, sometimes leading to enormous swings in value.

Musk has the majority of the voting rights for SpaceX. In other companies, shareholders can theoretically influence outcomes through shareholder proposals. With SpaceX that isn’t true. Other companies can be sued by shareholders for bad behavior, but SpaceX has limited shareholders’ litigation rights. One way to avoid a company that has made these choices is to sell the stock — but the inclusion in index funds means that’s harder.

Also, again, people don’t like Elon Musk.

But wait. I don’t vote on the corporate governance for companies in my index funds. Why does corporate governance matter to me?

You don’t, but the big indexers do. That means a lot of power is concentrated in just a few hands. It’s one of the worries people have about index funds. There are some other criticisms of index funds, too — that they buy high and sell low when they rebalance, for instance — and some investors believe they distort the market, making big companies even bigger. That’s why some analysts have called index funds “worse than Marxism.” Coming from capitalists, that’s a pretty big insult.

But still — if you believe those big indexers are sophisticated investors who are working on your behalf, you want them to make choices in corporate governance. To, for instance, vote against acquisitions that might be bad for shareholders, or install problematic members of the board of directors.

It seems like if you add up all these mega-IPOs along with the existing tech companies, there’s a lot of AI concentration in the index funds. Should I worry about that, in case AI is a bubble that pops?

Even before SpaceX entered the Nasdaq-100, most of its biggest companies were already AI-heavy — like Nvidia, Apple, Microsoft, Amazon, Google parent Alphabet, Broadcom, and Meta.

One of the biggest criticisms Malkiel hears about index funds is that the market is extremely concentrated, so that 10 companies are worth more than 30 percent of it. But he doesn’t view that as an argument against index funds. “The market’s always been concentrated,” he says.

“We’ve overhyped every technological change in history,” Malkiel adds. Railroads were overhyped, and so was the internet in the ’90s, and doubtless we are overhyping AI right now. That’s not a reason to be scared of index funds. “You’ve got to remember that it’s a very small minority of stocks that are responsible for all the return in the market,” Malkiel says. “That’s why you shouldn’t be terribly worried.”

What else are people worried about?

SpaceX isn’t getting fast-tracked by the S&P 500, another major index with its own governance rules. That may create significant differences in returns between index funds tracking the S&P 500 and the Nasdaq-100. (I, for one, look forward to seeing how that plays out.)

I suspect that most of the growth in SpaceX’s value has already been realized — which is why we have a megacap IPO in the first place, so that all the private investors can cash out — but as with Tesla, SpaceX is a meme stock with a sizable interest from retail investors. That decouples its performance from its fundamentals, effectively making it difficult to predict how the stock will actually do.

Does SpaceX’s size and inclusion suggest people should simply buy SpaceX stock directly?

No, says Malkiel. “If I were buying individual stocks, I would think twice about buying SpaceX, which is tremendously overhyped,” he tells me. But people wouldn’t be better off by avoiding an index fund in order to avoid SpaceX.

Over time, the market has produced a return of about 10 percent a year. But the majority of companies aren’t responsible for that return, Malkiel says. Only 4 percent of stocks give that rate of return, and everything else underperforms. If you own an index fund, you will definitely own a bunch of the stocks that lose money, but you’ll also own that crucial 4 percent. “We know experts can’t determine which ones are going to be good,” he says. “The point is, we don’t know which ones are going to be the best and which ones are going to fail.”

Besides, if you have an index fund with SpaceX in it, and SpaceX loses value, the fund rebalances with fewer SpaceX shares, since SpaceX is proportionately less of the overall market. Lots of companies, including those that are in index funds, go bankrupt every year. The focus isn’t on losses — it’s about gains.

Are there other SpaceX schemes I should be aware of?

SpaceX president Gwynne Shotwell donated shares of the company to Trump Accounts, which are investment accounts for children. The president said the donation was worth $325 million. That is perhaps more alarming than the index funds, because it ties SpaceX very closely to political power.

Let’s say I want to avoid owning SpaceX shares at all. How can I do that?

Besides preferentially investing in the S&P 500 index funds, you might also choose to invest in environmental, social, and governance funds. They generally have higher fees than index funds and don’t perform as well, but if not having SpaceX in your portfolio is a high priority, that might be a way to avoid it — since Musk’s control of SpaceX means the company flunks the “G” part of the requirement. (It may also flunk the “E” part, environment, thanks to the pollution from rockets and AI.) Different ESG funds have different criteria, but someone trying to avoid SpaceX because of Musk might end up with Tesla in their ESG fund — for its electric vehicles, Malkiel says.

Meet the lawyer who beat Elon Musk — twice

2026-06-30T08:59:20-04:00

“After college, my plan was to come to New York and get a record deal.” | Cath Virginia / The Verge, Getty Images

Watching Elon Musk fulminate at Bill Savitt during Musk v. Altman — the case in which Musk sued Sam Altman and OpenAI instead of seeing a therapist about his AI failures — was a bit like watching a toddler have a temper tantrum at his nursery school teacher. Savitt’s questions were “designed to trick me,” Musk said. He also told Savitt at one point, “You mostly do unfair questions.”

Savitt, who has the approximate demeanor of a handsome Droopy Dog, gently told Musk, “I am trying to put the questions as fairly as I can. I am doing my best.”

I’ve seen a number of styles of cross-examination. Savitt’s was mild-mannered and soft-spoken; his questions were mostly easy to answer, sometimes simply asking Musk to restate things he’d said in direct examination earlier that day. That Musk mysteriously could no longer remember what he’d happily told his own lawyer went a long way toward establishing Musk as an unreliable narrator from the jump — since Musk was the first witness on the stand.

“If you read the Wall Street Journal, you might as well be looking at Bill Savitt’s daily calendar.”

Savitt’s handled a number of important cases — representing Coinbase in its fight against the Securities and Exchange Commission, KKR in the (important to merger and acquisition nerds) Corwin v. KKR Financial, and Sotheby’s in its defense of a poison pill. “If you read the Wall Street Journal, you might as well be looking at Bill Savitt’s daily calendar,” wrote legal publisher Lawdragon in 2015. But his run-ins with Musk have put him on the map for a wider audience.

While Savitt had some business with Tesla in the past — Savitt’s firm, Wachtell, Lipton, represented Tesla in its SolarCity acquisition and resulting litigation — he hadn’t dealt directly with Musk, he told me. But when Musk tried to back out of his agreement to buy Twitter, Savitt represented Twitter. He won. And with Musk v. Altman, he’s won again.

Savitt says he hasn’t taken on any new cases opposing Musk or his enterprises since the trial ended. His practice, which has been “pretty busy for a long time,” has had a number of inquiries about cases, but it’s hard to know how much Musk v. Altman influences that. Still, given the number of lawsuits Musk embroils himself in, it’s not difficult to imagine that Savitt could stay pretty busy as the go-to Musk legal nemesis.

I chatted with Savitt about how he prepares for a case, a process that, in Musk v. Altman, involved playing a Fender Telecaster through a Cube amp; how he thinks about the nonlegal repercussions of lawsuits; and the questions he has about the future of AI in law. Because Musk is appealing the jury’s verdict in Musk v. Altman, Savitt declined to discuss specifics of the case — but I suspect, given his success so far, he may have the blueprint for beating Musk.

This interview has been edited and condensed.

Having seen a couple of Musk appearances in the courtroom, I know he can be a particularly difficult witness to cross-examine. How do you prepare for that kind of cross-examination, and how do you think about what your goals are when you’re working with Musk or a witness like him?

If you have a witness who’s a formidable personality, who you know is going to be very smart, you know has the capacity to see around corners, and you know who has the ability to be charming, if you have a witness like that, your task is harder than it would otherwise be. And the crucial part of being ready for an examination like that is, this probably won’t surprise you, is just massive preparation. You have to know every document that’s relevant to what this witness may have to say and you’ve got to know it like that [snaps fingers]. You’ve got to have it at your fingertips. You have to because there’s not time in the moment to react.

It’s also really important to never take the bait, never get into a fighting match, never be pushed off of your objective by the force of personality that’s in the witness box. That doesn’t mean that you should just stick to a script, and I have seen lawyers stick to a script particularly in high-profile examinations, and you miss tremendous opportunities if you do that, because there’s always a surprise or two or three in an examination. And I think what is often the best moments of a cross-examination are when a little rabbit runs across the road and you know to go chase it down. But you’ve got to have the massive preparation to know when to go and chase down leads as they come up, which they will do right in the middle of the examination, and then come back to your project.

I’m curious about what you mean when you say you have these moments of a rabbit running across the road.

There’s this adage that particularly on cross-examination, a lawyer should never ask a question to which he or she doesn’t know the answer, and that’s usually good advice, but sometimes it’s good to take a shot, particularly if the answer can’t harm you.

I had a case in which a relevant question was whether someone had information that they weren’t supposed to by virtue of a nondisclosure agreement. This was a very important case that led to some really important case law. And watching the witness on direct [examination], there was something about the way she was answering questions that caused me to believe she had more information. So when I got to the podium, I asked questions that projected confidence that she had the information that she wasn’t supposed to have. And at first, she resisted, but I persisted, and eventually she thought I had it and she just gave the answer up. And it was extremely interesting and it led to a whole line of questioning about how the information was obtained, how relevant it was to the corporate activity at issue, and it ultimately fed very much into the result, which was a huge win for a client.

So a lot of times, it has to do with trying to pick up cues with the way a witness is answering your questions or your adversary’s questions, altering the tone of questioning so as to convey either curiosity or confidence in the proposition that you’re asking about. Every extensive cross-examination will yield a surprise or two.

One of the things that I’ve noticed, sitting through a handful of trials, is that the lawyer that can present a coherent timeline and just order events in the jury’s head seems to be the lawyer who really wins. How you go about ordering a timeline that sticks?

I agree with you. Nearly in every case, someone comes up with the idea of approaching the briefing or the presentation in a nonchronological way for some good, substantial reason having to do with emphasis of themes, and nearly always it’s a mistake. It is remarkable just how much easier it is to understand a succession of facts when they’re presented in chronological order. And in the Musk case we just tried, of course, the sequence of events was exceedingly important in all sorts of different ways.

Putting things in chronological order in a way that will ring true to me or you or whoever happens to be sitting in the jury boxes, it’s what distinguishes a winner from a loser, I think, in a case.

How do you think about what’s going on legally for your client versus other considerations such as reputational damage?

Every case has a lot of different things going on. And most litigation that’s filed is filed with some nonlegal but commercial objective behind it, and most lawsuits can be and most are resolved long before they get to a trial. Some situations have that in a much more exaggerated way. As a lawyer, what is most important is to remember that it’s not about you and it’s not always about the law or the courtroom. It’s about your client and it’s about your adversary’s client and what they’re trying to achieve and how they’re trying to achieve it.

A mistake is to view everything that happens in a contested lawsuit as something that is a fit subject for disposition by courts and judges and lawyers because the great majority of it isn’t. The great majority of litigation has some other objective having to do with commercial advantage, forcing a strategic negotiation, creating reputational gain or harm, and managing all of that. A case doesn’t have to be hugely high-profile to have that impact, and every one is different. Most lawsuits are about a lot more than just the lawsuit, and it’s exceedingly important to be attentive to that as… Maybe not as an advocate, but as a counselor. That’s why, when I think about supplying representation, it’s as much about being a counselor across the entire universe of problems that the case is going to pose as opposed to just being a lawyer, being an in-court lawyer, because that’s only part of the job, and a lot of times, it isn’t even most of it.

I saw a profile of you in the Financial Times that mentioned you often play guitar as you’re thinking about the ins and outs of a case. Did you bring the guitar with you to San Francisco? How did that aid your preparation?

Well, I brought a guitar to San Francisco, to Oakland, is the answer to that question. We had a little trial office a few blocks away from court, and I had a guitar with a small but really terrific amplifier that I did play, and it helped. It was a Fender Telecaster and it was a neat one. I especially outfitted it with what are called P-90 pickups. So it has this very cool sound, and I ran it through a Cube amplifier that gives a tremendous amount of distortion at very low volume, so it’s a really cool sound, and you don’t have to drive the person in the next room crazy with it.

Everyone’s got their own thing. You have to have a huge binder of documents and you’ve got to know what’s in them. In the abstract, it’s a very large undertaking because you’re talking about hundreds and hundreds of documents and you need to know the details. But by the time you get to trial, you’ve been living with the case for a long time and you do know most of it.

Is there a specific thing that you like to play or do you just noodle?

After college, my plan was to come to New York and get a record deal. And so, I had bands and we played all over the place, mostly original, some covers. I mean, what I play at this point, it really just depends. Usually, I will play a song and maybe sing along with it. Sometimes I’ll just riff. It’s very undisciplined at this point. But, I mean, I’ve been playing the guitar for a long time at this point and I used to be really quite good at it.

It’s pacifying, a little bit. It puts my mind at rest to be doing something that involves hearing and acting, and even in an indirect way, speaking, that isn’t about the law or isn’t about the case. At this point, it doesn’t take me a tremendous amount of mental energy to play because my hands know what to do. It’s calming and it’s converting. I do quite a lot of cycling and it has the same effect, it’s mind clearing.

Those are things that have that huge boost. It’s a real benefit to be able to do something else that’s a different way of apprehending the world, what you’re doing with your body, what you’re doing with your senses.

What else should I be asking about that I’m not? What am I missing? This is at least the third big time you’ve come in front of our audience — for instance, because of the Coinbase case. Are there things we should think about?

The Coinbase case, yeah. That was an extremely interesting case and a very gratifying outcome.

I suppose I would only just make this observation, which is that it’s no insight to say that we are still in the early days, but now in a very intense period where artificial intelligence and its application are going to be points of discussion, controversy, and debate. And the lawsuit that you were covering, it wasn’t just about Elon and Sam, it was about artificial intelligence and had implications for its future. And I think we are at the beginning of what’s going to be a fascinating and intellectually complex, legally complex series of debates, of contests about how artificial intelligence is going to be deployed, when, by whom, and I think that’ll be an extremely interesting thing for people to be watching. And I expect this case will feel as though it was near the beginning of what’s going to be a lot of, not necessarily litigation, but debate that happens in the public square about how this technology is deployed and how it’s monitored and by whom.

Obviously one of the questions for the legal community specifically is if you have an AI note-taker, is that the sort of thing that violates client confidentiality, right?

Oh, that’s a great question, and no one knows. I mean, if you ask an AI a legal question and it gives you legal advice, is it privileged? A fascinating question is when a chatbot or any AI says something, how can that be admissible in court? It’s always going to be hearsay and you can’t bring it in court. I mean, I was playing with some of these ideas in this trial. Can I put a computer on the stand and cross-examine it?

[Lopatto laughs]

These questions are funny, right, because it seems so ludicrous, but Liz, it’s coming.

This question is going to be important because there are going to be discussions about what the AI did or said, and how are we going to get at that as a legal system? These are fantastically interesting futuristic questions, but they aren’t too much in the future anymore.

Well, just because they’re funny doesn’t mean they’re not important. With AI as a focus point, are there specific other litigators or judges that you keep an eye on as being ahead of the curve or as being prescient about these kinds of questions?

I spend a lot of my time in the Court of Chancery in Delaware because it’s where all corporate disputes happen, and I think that bench will be… My guess is they will be a leading-edge bench, because they will need to be, and I think a lot of controversies will find their way into that court. I expect you will see specialists arising in artificial intelligence in the legal community. But it’s also my guess that the issues that are going to really require the hardest thinking and the best advocacy are going to be for the general trial lawyer who has a real feel for how it fits with everything else, artificial intelligence, how it fits with everything else as opposed to simply this area unto itself. I’m very interested to see how it develops in the legal profession.

The SpaceX IPO is great for Elon Musk and terrible for you

2026-05-29T13:31:41-04:00

Number go up? | Image: Cath Virginia / The Verge, Getty Images

I haven’t seen anything as stupid as the WeWork IPO document in a very long time — that is, until Elon Musk filed to take SpaceX public. WeWork was a joke. SpaceX is a threat. And if Musk and his bankers have their way, you are going to be their bagholder.

Lots of the top-line details leaked long before the S-1 filing itself became public. There’s the rumored valuation of more than $1 trillion. That’s despite the nearly $5 billion in losses last year. The total addressable market (TAM) for SpaceX — the amount of revenue SpaceX thinks it could make if won over what it thinks is its entire customer base — was listed as $28.5 trillion. By way of comparison, the gross domestic product of the US as a whole was a hair over $24 trillion, according to the St. Louis Fed.

I guess I could believe that Musk is the Lord and Savior of a bunch of weird polygons

This is absurd nonsense, but it might not matter. Musk is the original financial influencer, and his struggling electric car company, Tesla, trades at more than 300 times earnings. Ford and Toyota both trade at about 11 times earnings. Even Nvidia, a company that is arguably printing money, trades at 33 times earnings. Tesla is a meme stock, and SpaceX is poised to be the next one. Never mind that it is basically a space company plus an AI company plus a social network — a meme stock doesn’t have to make sense.

So where do I start? I guess we’re all supposed to pretend it’s 2015 and that Musk cares about humanity, and especially about sending humanity to space. Musk is trying to sell a big company with a big story: his messianic mission to “extend the light of consciousness to the stars,” a phrase that occurs seven times in the S-1. (“Light of consciousness” without its astral accompaniment occurs an additional three times.) There is an artist’s illustration of “Life on Mars.” The people who live there appear to be composed of polygons. I guess I could believe that Musk is the Lord and Savior of a bunch of weird polygons; I’ve seen the Cybertruck.

(WeWork guru Rebekah Neumann must be eating her heart out right now — “the power of We” is so quaint by comparison.)

Musk knows that his strength is the cult of losers who worship him. That’s why 30 percent of the IPO is reserved for retail investors. As for the grown-ups, well, there’s a Keynesian beauty contest in play; if you know that the loser cultists will buy whatever he’s selling, and that Nasdaq rule changes may get it fast-tracked onto the index, it might make sense to buy into the IPO. You’ll be watching Number Go Up regardless of the underlying value, and you’d be an idiot to leave that on the table. And the more people think that way, the more Number Go Up. Say it with me now, my Keynesians: The market can stay irrational longer than you can stay solvent.

In some ways, this isn’t just SpaceX’s IPO. It’s the IPO of financial nihilism writ large. Robinhood profited off financial nihilism, but it wasn’t itself a meme stock. SpaceX is different. It’s worse. And I don’t know how normal people can avoid having it stuffed down their throats.

SpaceX: An AI company

This company is called SpaceX, and it’s known for building rockets. The filing is peppered with references to the Moon (74), Mars (63) and “and beyond” (13), as in “Earth’s orbit and beyond” or “the Moon, Mars, and beyond.” But looking at the numbers from its IPO document, this is, by SpaceX’s own admission, an AI company. $26.5 trillion of its $28.5 trillion TAM is AI applications. If that seems awfully optimistic to you, don’t worry: SpaceX excluded the Russian and Chinese markets from its estimates.

About $13 billion, or roughly two-thirds, of SpaceX’s capital spending in 2025 went to AI buildout. How did that go? Well, the AI arm of SpaceX lost $6 billion in operations and had revenue of just $3.2 billion. Meanwhile, Anthropic is going to be turning an operating profit of $559 million in the second quarter of this year. Yeah, you read that right: Profit. In the quarter.

Is Grok one of the most advanced frontier models? Well, it’s distilled from them, anyway!

Of course, you could figure the vibes on that out just by knowing that SpaceX leased out its massive cloud computing operation to Anthropic for what the S-1 reveals to be $15 billion a year. Incidentally, xAI’s government contracts aren’t going so hot, which is possibly a problem for the company’s planned IPO.

So let’s talk about Grok, which Verge readers may also know as MechaHitler, “a truth-seeking AI model … which has emerged as one of the world’s most advanced frontier models,” according to the S-1. This is quite a turnaround from Musk saying in March that “xAI was not built right first time around, so is being rebuilt from the foundations up.” Is it one of the most advanced frontier models? Well, it’s distilled from them, anyway!

The details on xAI’s recent deal with Cursor make this look even worse. You may recall that in April, SpaceX announced it made a commitment to maybe buy the AI coding company, which would give SpaceX a way to compete with enterprise AI products made by Anthropic and OpenAI. Well, if the deal goes through, existing shareholders will be diluted to the tune of $60 billion. If it does not go through, SpaceX pays Cursor $1.5 billion and also lets Cursor use more than $8 billion of compute. This does not suggest a strong negotiating position for SpaceX.

Greg Brockman and Ilya Sutskever, two OpenAI cofounders, felt in 2018 that Musk “really hasn’t done his homework [on] AI / AGI.”

The filing notes all the places SpaceX is now under investigation for Grok’s production of nonconsensual sexualized images, including those of children. Three lawsuits are called out specifically in the filing, two of which are attempting to achieve class-action status.

The timing of this filing is a little bit funny. Just last week, Musk lost his suit against Sam Altman and OpenAI, which accomplished basically nothing except revealing how bad Musk is at AI. Greg Brockman and Ilya Sutskever, two OpenAI cofounders, felt in 2018 that Musk “really hasn’t done his homework [on] AI / AGI.” That appears to still be true today.

SpaceX said that the AI unit containing X and xAI generated only $818 million in revenue in the first quarter of 2026. By way of comparison, Twitter alone made $1.2 billion in the first quarter of 2022, or about 30 percent more, before Musk bought it. A remarkable business mind, truly.

Rocket to the crypt

Doubtless you are thinking, well, but what about space? There’s plenty of AI bullshit there, and we’ll get to it later, but in this case it all hinges on Starship, which has so far been prone to unexpected explosions. Starship is clutch for launching the heavier versions of Starlink satellites, some of which are currently sitting around gathering dust as they wait for their rides into orbit. Some NASA (and other) government contracts hinge on it, too.

When the filing dropped, the Starship prototypes launched had barely carried more than the Falcon 9, the lowest-end rocket SpaceX has. You may be thinking that’s the kind of thing that would be disclosed in an IPO filing, but you’d be mistaken. “Starship V3 is designed to deliver 100 metric tons to space in a fully reusable configuration while enabling rapid turnaround times.” I am going to skip “fully reusable” except to point out that it will limit capacity if it is even achievable.

Instead of disclosure about what SpaceX had actually achieved to date with Starship, the language we see is this: “We expect to commence deploying our next-generation V3 satellites, designed to offer one Tbps of downlink capacity per satellite, using Starship in the second half of 2026. We expect that a single Starship launch will be capable of deploying up to 60 V3 satellites.”

“It’s Musk math.”

Okay, so the V3 did launch two days after the filing, on May 22nd, with a sort-of successful mission. I say “sort-of successful” in that it did not blow up on launch and did manage to reach space. The problem was, Starship couldn’t keep all its candles lit — one of its engines failed. Its booster also exploded on return, but I am less concerned about this. Just getting the satellites in space is the main problem. This test flight deployed 20 dummy satellites. I don’t know how many metric tons that is, and it seems SpaceX didn’t say, but it’s still shy of the goal of 60 satellites. Again, this is the sort of thing it feels like you should tell investors about? You know, how your key rocket that is required for all your big plans is actually working?

Speaking of investors, there is an irritating detail I noticed in the S-1. Assume the timeline in the S-1 is correct — we have no reason to assume this, by the way; SpaceX’s delays are legendary — and let’s do some math. The V3 satellites Musk is talking about weigh 2,000kg, according to an FCC filing. Sixty of them add up to 120,000kg, or 120 metric tons. If Starship works as advertised, delivering 100 metric tons, that is still not enough for all 60 V3 satellites.

“It’s Musk math,” says Chris Quilty, the cofounder and co-CEO of Quilty Space, an analytics firm. He notes that the V3 satellites may not weigh exactly 2,000kg, and that if SpaceX stacks them so there’s no wasted volume, 60 satellites may be possible. Sure, maybe. Hard to know without details in the filing, though. If everything hinges on this ship, I expect more fucking details on the ship, you know?

There is also some outright fantasy in this section: the vision of Starship as a point-to-point transportation system

Revenue from the launch business decreased by more than a quarter in the first three months of this year, primarily because there were fewer customer launches. One possible theory of SpaceX was that if someone made rocketry much cheaper, many more people would want to shoot shit into space. The paperwork suggests that SpaceX’s biggest customer, when it comes to rockets, is SpaceX.

There is also some outright fantasy in this section: the vision of Starship as a point-to-point transportation system as imagined by Elon Musk in 2017. In-space manufacturing. Space tourism. Asteroid mining. Sure. Whatever. Starship was supposed to have its first crewed flight two years ago. Obviously, that hasn’t happened. But people like fantasy I guess, so it’s there in the S-1.

Starlink has also been a cost center, though it hasn’t been as bad as AI. In 2025, the company spent $3 billion; for the first quarter of 2026, $930 million. The rocket is the lynchpin of SpaceX’s moneymaking plans, so it sort of has to work.

The business and fantasy of space

There is one viable business in this IPO. It is Starlink, the satellite internet provider, which brought in more than $11 billion in revenue last year. “The reality is that Starlink is the cashflow machine that will fund the xAI and SpaceX Starship business,” says Quilty.

Starlink is an actual good business, even if the revenue reported in the S-1 is less than both Morgan Stanley’s projections and what SpaceX told potential investors earlier this year. That may be because it was heavily discounted, and consequently, the revenue per subscriber declined by about 25 percent. I don’t know, and the filing doesn’t say, what that will mean for retaining those subscribers.

SpaceX has stapled its unsuccessful AI dreams to the successful business

But Starlink emerged at the right time — as TV was losing dominance, meaning less revenue for the geostationary satellite TV providers. Though it started with consumers, it’s proven itself to enterprise customers as well, Quilty notes. Starlink has a significant lead on all its competitors. Maybe SpaceX is juicing its numbers for an IPO, but that hardly seems necessary. And while some critics note that there’s no cost of deorbiting written into the S-1, Quilty tells me that at the low orbit at which the Starlink satellites are now being sent — they’re moving down to 380km above Earth — those objects are functionally self-cleaning. That’s because the closer an object is to Earth, the less time it takes to decay; above 700km, it may take years, but at 300km it’s weeks to months, he says.

SpaceX has stapled its unsuccessful AI dreams to the successful business using Starlink as a guide. The idea is: data centers in space, with Starlink beaming the data back down. The pitch is that it’s easier to get solar energy in space, so that will solve AI’s energy bottleneck. (Presumably also the environment will help with cooling, which is often done, controversially, with water. I suppose you could radiate heat to space like the James Webb Space Telescope does?) “Our goal over time is to launch 100 gigawatts of compute to space each year,” the filing reads.

In case you are wondering, some variation of the phrase “The Sun contains approximately 99.8% of the solar system’s energy” occurs four times in this document. I want you to look at how stupid that is. You could say “almost all” or “more than 99 percent” and get the job done, but it wouldn’t make you sound like a real nerd. No, you need to really drive home that the decimal place is still just not quite accurate enough for your engineering needs.

Musk has figured out that if you make a bunch of sci-fi bullshit promises, people can’t really examine them carefully for plausibility

This kind of speaks to what makes my hackles go up. A very cynical way of reading this filing is that Musk has figured out that if you make a bunch of sci-fi bullshit promises, people can’t really examine them carefully for plausibility the way they might for, I don’t know, regular data centers on Earth.

So let’s talk about those.

Musk, who claims to want to save humanity by spreading us out among the stars and whose car company is premised on renewable energy, bought another $2.8 billion of polluting gas turbines to power SpaceX’s data centers, and tried to bury that particular statistic in a footnote. SpaceX is already being sued for its use of turbines. It’s been granted permits for 15; it’s using 46. Those turbines even show up in the risk factor section because if an injunction is granted or the permits are revoked, the existing bad AI business will suffer. Exciting stuff!

Quilty, the space analyst, is more upbeat about data centers in space than I am, viewing them as a mid- to long-term opportunity for the company that hinges on Starship’s success. Musk is not the only person hyping them; Jeff Bezos is excited about them, too, and there are several smaller companies making their own attempts. There are good reasons to be skeptical, which are, in brief: launch and repair costs, the difficulty of replacing air and water radiation cooling, the potential dangers of space debris and solar flares, slower data transfer, and the fact that Earth-based facilities will always be more cutting-edge. To me, the excitement about space-based data centers suggests typical Silicon Valley groupthink that gave Musk a chance to execute a hail-mary pass.

Debt bets

By stapling several failing businesses onto SpaceX, Musk is attempting to become too big to fail. If his road show is successful, the fast-tracking rules change that Nasdaq just pushed through means that SpaceX will join the Nasdaq 100 in just 15 days — putting it in the index funds favored by many passive investors. One index fund analyst suggests the effect will be that the funds will buy “$7-ish billion” of SpaceX on just one day.

Artists’ renderings of Mars are just window dressing. This IPO will make Musk the world’s first trillionaire. He’ll control 85 percent of SpaceX’s voting rights, by the way. (The distrust that Sam Altman and Greg Brockman felt about Musk ever loosening his grip on OpenAI seems pretty justified, doesn’t it? Getting me to sympathize with Altman isn’t the most loathsome thing Musk has done — that would be the hundreds of thousands of deaths he caused — but I may resent it the most.) Assorted Wall Street types are currently jerking off imagining what they are going to do with all that sweet, sweet money. Goldman’s David Solomon didn’t do that DM slide for nothing! How do you think he got “lead left” on the prospectus?

Let’s talk about what is real: $30 billion of debt

Anyway, we know the Mars thing isn’t serious because there is nothing in SpaceX’s risk factors about how the company has done no work whatsoever on the biological issues facing people who might attempt to live — or even just work — in space. The hope is that people will simply get so excited about the promised sci-fi future that they’ll just ignore the rest of it.

So let’s talk about what is real: the debt, which, according to SpaceX’s risk factors, is almost $30 billion.

Before its IPO, SpaceX refinanced some of its debt with a $20 billion bridge loan that comes due in September 2027, with the possibility of extension. To do that, SpaceX took a $1 billion prepayment penalty on one of its loans. (Curiously, SpaceX also spent about $4 billion repurchasing stock in the first quarter of this year.) According to the contract’s terms, as disclosed in the S-1 filing, SpaceX must use the first $20 billion it raises from the IPO to repay this debt.

Also, interestingly, SpaceX went into a technical default on a $1.5 billion credit facility by acquiring xAI, because of the amount of debt xAI brought with it. Yet another reason to view that acquisition askance!

Because Musk has 80 percent of the SpaceX voting rights, shareholders effectively have none

The other thing to point out about the debt is the related party: Antonio Gracias, who sits on the board of SpaceX and Tesla. His company, Valor Equity Partners, has three lease deals with SpaceX subsidiaries, worth a combined $20 billion, that are guaranteed by SpaceX. I would not be making a huge deal out of this except that they are noted as a “failed sale leaseback” — which means a loan with GPU collateral. It’s funky enough that Fortune says “SpaceX and xAI structured the deals in a way that, if accepted, would have kept the financing off SpaceX’s balance sheet.” It seems SpaceX’s auditors refused this. So that’s $9 billion in debt.

“That’s to me, that’s the worst,” said Nell Minow, a chair of ValueEdge Advisors, to Fortune, when asked how the arrangement stacks up against all the related-party deals she’s seen in the last 40 years.

Then there’s the governance issues. Specifically: Elon Musk. If shareholders don’t like the direction of a company, they have about three major rights: They can vote, they can sell their stock, and they can sue. “We’re now in a period where all those rights are diminishing,” says Ann Lipton, a professor at the University of Colorado’s law school.

Because Musk has 80 percent of the SpaceX voting rights, shareholders effectively have none. The litigation rights have been curtailed, and there’s an arbitration clause that suggests “there’s a real chance he’s barred anyone from suing for securities fraud,” Lipton says. The SEC under Donald Trump is effectively toothless — there’s already an attempt at settling a suit over Musk’s failure to properly disclose his Twitter ownership before his buyout offer — so there’s no real risk from them. And the index fund inclusion makes it more difficult for people to actually get rid of SpaceX shares — there’s much more forced buying.

“There’s no getting off the train.”

“There’s no getting off the train,” Lipton says.

Which brings me back to WeWork. One major difference between Adam Neumann and Elon Musk — besides the scale of their grandiosity — is that Musk has a proven ability to rally stocks. Another is all those leaks from the S-1 that came through before the actual document dropped to create buzz and hype. It’s a violation of securities laws to leak the S-1 before the filing, Lipton says. And while it’s not impossible that they are coming from somewhere other than SpaceX, based on what she’s observed publicly, she thinks that SpaceX is the likeliest leaker. “That’s exactly what they’re not supposed to do, but it’s what I believe they’re doing, and the SEC hasn’t shown the slightest interest,” she says. “You’d think they’d at least look into it.”

The top-line data without the details on debt and related party transactions make SpaceX look better than it is. Now, more than ever, our society is built around gambling, and it seems a lot of people are feeling lucky. And that means that you, my friend, may wind up helping make Elon Musk a trillionaire whether you like it or not. An early index listing gives SpaceX more access to institutional investors through their index funds. Those index funds will have to buy SpaceX shares, and that means actively managed funds will probably buy SpaceX shares, too, to benefit from the trade — since passive funds like index funds now outnumber active funds in assets. (The passive tail is wagging the active dog, if you will.) The likelihood the shares wind up in many people’s retirement accounts means that if SpaceX fails, the people who get hit are not the wised-up early investors but basically a bunch of normal people, the ones who can least afford it.

And that, along with Musk’s coziness with the Trump administration, suggests that Musk has positioned himself for a government bailout if SpaceX fails. Now, if that’s not spreading the light of consciousness, I don’t know what is. The largest IPO of all time, after all, also means that we will possibly see the biggest flop of all time. And if I know Musk, he’ll do everything he can to make sure someone else is on the hook for that.

All of the updates from Elon Musk and Sam Altman’s battle over OpenAI

2026-05-21T16:15:26-04:00

Sam Altman and Elon Musk are facing off in a high-stakes trial that could alter the future of OpenAI and its most well-known product, ChatGPT. In 2024, Musk filed a lawsuit accusing OpenAI of abandoning its founding mission of developing AI to benefit humanity and shifting focus to boosting profits instead.

After nearly a month, with the trial featuring testimony from Musk, Altman, Microsoft CEO Satya Nadella, OpenAI cofounder Greg Brockman, former OpenAI board member and mother of several of Musk’s children Shivon Zilis, and a few others, the jury deliberated for a couple of hours before returning to the “room full of untrustworthy, unreliable people all fighting with each other” with a verdict, deciding to dismiss all charges due to the statute of limitations.

Musk was a cofounder of OpenAI and claims that Altman and Brockman tricked him into giving the company money, only to turn their backs on their original goal. However, OpenAI claimed that “This lawsuit has always been a baseless and jealous bid to derail a competitor” in a bid to boost Musk’s own SpaceX / xAI / X companies that have launched Grok as a competitor to ChatGPT.

In his lawsuit, Musk asked for the removal of Altman and Brockman, and for OpenAI to stop operating as a public benefit corporation.

People to Know

Plaintiff

Elon Musk — plaintiff, OpenAI cofounder and now CEO of rival xAI

Steven Molo — lead counsel for the plaintiff

Jared Birchall — manager of Musk’s family office

Shivon Zilis — former OpenAI board member who shares multiple children with Musk

Defendant

Sam Altman — defendant, CEO of OpenAI

William Savitt — lead counsel for the defendant

Greg Brockman — president of OpenAI as well as a cofounder

Ilya Sutskever — former chief scientist at OpenAI and a cofounder

Judge

Yvonne Gonzalez Rogers — aka YGR, trial judge

Here’s all the latest on the trial between Musk and Altman:

Closing time

2026-05-15T11:56:05-04:00

Today was closing arguments in the Musk v. Altman trial, and I almost feel bad writing about the unbelievable demolition derby I just witnessed. Steven Molo, Musk’s lawyer, stumbled over his words. He at one point called Greg Brockman — a co-defendant — Greg Altman. He erroneously claimed that Musk wasn’t asking for money and had to be corrected by the judge. He made it clear we’ve heard from many liars over the past few weeks, but offered little evidence for Musk’s actual legal claims.

OpenAI’s lawyer Sarah Eddy countered this by simply arranging the mountain of evidence that the company introduced in chronological order. She didn’t spend time trying to pretend anyone in this trial is especially reliable. She did, however, get the zinger of the day, about Musk: “Even the mother of his children can’t back his story.” William Savitt, who took the defendant baton after her presentation, demonstrated the number of times Musk “didn’t recall” some critical detail — and wondered how a sophisticated businessman couldn’t understand or read a four-page term sheet OpenAI had sent to him.

I found myself wondering, again, why we were all wasting our time here. So let’s discuss the gossip, which is the real point of this trial. How good was it? Here are my favorite nuggets.

Musk used OpenAI to improve xAI. I’m afraid this trial was front-loaded; revealed the first week, this was the best bit of gossip we got. As I suggested in 2024, Grok was developed very fast — so fast I was skeptical it was entirely independent. Turns out, it wasn’t. Musk admitted that xAI distilled other models, including OpenAI’s. What was all that investor money for, again?
Tesla AI failed to run at AGI. Musk in fact failed at this twice, once by unsuccessfully trying to acquire OpenAI and again by unsuccessfully trying to kneecap OpenAI by recruiting its employees, including Sam Altman himself, for a “world-class AI lab.”
Sam Altman confirmed decade-old reports that he thought about running for governor of California.
Everyone, but especially Musk, is obsessed with Demis Hassabis.
Musk claimed he doesn’t lose his temper. During the cross-examination, he lost his temper at OpenAI’s Savitt.
Mira Murati played both sides of the Altman ouster — providing some chats that got him removed, then feeding Altman details about what the board was up to, publicly complaining about the event, and refusing to tell employees about her role in the ouster. I would call this “directionally very bad” for Murati. Everyone hammered on Altman as a snake, but Murati is no better.
Musk wanted his kids to inherit OpenAI. (At least, according to Altman!)
Altman hired Savitt, who kicked Musk’s ass on Twitter, and may very well kick his ass again. I was amused by Altman’s commitment to knifework under oath, managing to suggest that Musk had little to do with OpenAI, say he had “front-runner-itis,” and imply Musk was no longer respected, but managing to annoy someone just procedurally… From one petty bitch to another: beautifully done.
Brockman and other OpenAI engineers worked at Tesla, while they were theoretically employed by OpenAI, on self-driving software.
Shivon Zilis didn’t tell her fellow board members that Musk was the father of her children until Business Insider got ahold of some court documents. She didn’t even tell her own father!
“Rumor has it that, on top of the folks that secretly converse on Twitter DM because they don’t trust Demis not to spy on their email and gchat…”
“I don’t want to be IBM and OpenAI to be Microsoft.”
The jackass trophy. I am so sorry that the jurors didn’t get to see it. It was like a Little League trophy but just the back half of a donkey. Even Judge Yvonne Gonzalez Rogers thought this was pretty funny.

While this trial was meant to punish Altman and arguably already has, I’d like to focus on my actual takeaway here: Elon Musk sucks at AI.

Look, Musk said multiple times that OpenAI wouldn’t succeed. He’s tried, repeatedly, to kneecap it and steal its researchers and in one case — that of Andrej Karpathy, a founding team member Musk lured to Tesla — succeeded. But how’s xAI doing? Well, it’s a black hole for money that’s been acquired by SpaceX. It’s hemorrhaging researchers. One of its huge data centers isn’t going to be occupied by xAI — there’s a deal with Anthropic instead. It might buy Cursor, in an attempt to match the programming-focused products put forward by Anthropic and OpenAI. xAI’s enterprise users, whether that’s the US government or private companies, have been strong-armed into using it. To the degree that its bespoke CSAM machine Grok, aka MechaHitler, works, it apparently works because Musk distilled other people’s models.

Zilis wrote in 2018 that Brockman and Ilya Sutskever thought that Musk “really hasn’t done his homework [on] AI / AGI and that concerns them about working with him.” I am leaving this trial thinking all these fucking liars deserve each other, but in fairness to Brockman and Sutskever, they were absolutely right about this. The question now is if anyone who’s thinking of investing in the upcoming SpaceX IPO has noticed, or cares.

Behold, the Elon Musk jackass trophy

2026-05-15T12:20:34-04:00

Yesterday, in Musk v. Altman, before the jurors came in, Sam Altman’s team passed up what looked — from a distance — like a Little League trophy. It was not. Judge Yvonne Gonzalez Rogers had the lawyers read the inscription aloud for the press: “Never stop being a jackass.” It’s a commemoration OpenAI employees bought for research scientist Josh Achiam, who testified yesterday.

How exactly did this come up in a trial about nonprofit contract law? Allegedly, when Elon Musk was leaving OpenAI, he talked about wanting to race ahead of Google. Achiam, who worked on AI safety, asked if that was really such a good idea. Musk called him a jackass. Years later, Musk is portraying his lawsuit as an attempt to avoid AI causing serious harm — something that, Altman’s team suggests, wasn’t high on his list of concerns back then.

During his own direct testimony, Musk denied the incident took place, saying that he might have said something like, “Don’t be a jackass.”

YGR ruled that the jurors would not get to see the trophy unless Musk’s team gave OpenAI a reason to introduce it, so they only heard about it. But now you can see it for yourself.

Correction, May 14th: The researcher is Josh Achiam, not Ackiam.

Microsoft doesn’t want any of this

2026-05-13T12:29:27-04:00

Maybe I’m just punch-drunk in my third week attending Musk v. Altman, but I have become very, very fond of Microsoft during the course of this trial. They don’t want to be here any more than I do.

Their opening statement was honestly one of the most Microsoft things I’ve ever seen. More than anything else, it was an ad for Microsoft that listed their products in some detail. The general implication, from that statement, was that this trial was absurd, their involvement was absurd, but you, ladies and gentlemen of the jury, might still enjoy an Xbox game.

There’s been a great deal of high drama on the stand, from Musk, his associates, and OpenAI. Microsoft was an early and major funder of OpenAI’s for-profit company, it’s true. We saw internal emails about whether funding OpenAI was a good idea and how to avoid becoming IBM to OpenAI’s Microsoft. (In the context of this trial? Normal!)

But Microsoft is notably missing as primary decision-makers in the extensive text message threads, diary entries, and the other embarrassing ephemera. They appeared in a few emails, and there were a few texts from CEO Satya Nadella suggesting OpenAI board members or asking Sam Altman or Mira Murati to call him, but that was about it.

On the stand, Nadella was mild-mannered and unperturbed, about as interesting and sensible as a pair of pleated khaki pants. His answers were largely unmemorable, except for one: He felt that OpenAI’s board drama of 2023, when Altman was briefly ousted, “was sort of amateur city, as far as I was concerned.” True! But then this whole trial is kind of amateur city, as far as Microsoft is concerned. The 12AM text threads between Musk lackeys, the wrangling over equity, the Musk “I’ve had enough” email, all of it… just not really adult behavior.

So throughout the trial, Musk’s lawyers and OpenAI’s lawyers slugged it out over witnesses. Then the Microsoft lawyers got up, and like the trial’s punchline, they went through a series of events: “And was Microsoft there?” It was not. “Did anyone tell anyone at Microsoft anything about that?” They did not. “Was Satya Nadella there?” He was not. No further questions, your honor.

I look forward to their closing statement. Perhaps it will be an ad for Microsoft Word.

Sam Altman was winning on the stand, but it might not be enough

2026-05-12T20:13:34-04:00

Who, me? | Image: The Verge; Getty Images

After two weeks of hearing from assorted witnesses that he was a lying snake, the jury finally heard from the lying snake himself: Sam Altman. At the end of the testimony, his lawyer William Savitt asked him how it felt to be accused of stealing a charity.

“We created, through a ton of hard work, this extremely large charity, and I agree you can’t steal it,” Altman said. “Mr. Musk did try to kill it, I guess. Twice.”

Altman was fully in “nice kid from St. Louis” mode, and did a passable impression of a man who was bewildered at what was happening to him. When he stepped down from the stand holding a stack of evidence binders, he even looked a little like a schoolboy. He seemed nervous at the beginning of his direct testimony, though he warmed up fairly quickly. Overall, he seemed to give credible testimony — and at times, it seemed like the jury liked him.

Throughout this trial I’ve had some difficulty imagining what the jury is making of all this because I am a little too familiar with the figures who are testifying. I have heard some audacious lies under oath, like when Elon Musk told us all he doesn’t lose his temper. (He then proceeded to lose his temper on cross-examination.) Or like when Shivon Zilis, the mother of several of his children, told us that she didn’t know Musk was starting xAI — which seemed to be directly contradicted by her text messages. Or when Greg “What will take me to $1B?” Brockman told us he was all about the mission. I certainly believe Altman isn’t trustworthy — I mean, The New Yorker published more than 17,000 words about how much he lies. But unlike with Musk, there are contemporaneous documents backing Altman’s version of the story. At least, mostly.

“My belief is he wanted to have long-term control”

After OpenAI’s Dota 2 win, discussions for a for-profit arm started in earnest. “Mr. Musk felt very strongly that if we were going to form a for-profit he needed to have total control over it initially,” Altman said. “He only trusted himself to make non-obvious decisions that were going to turn out to be correct.”

Altman testified that he was uncomfortable with Musk’s insistence on control, not just because Musk hadn’t been as involved as everyone else, but because OpenAI existed so no one person would control AGI. And at Y Combinator, the startup incubator where he was president, Altman had seen a lot of control fights; no one wanted to give up power when things were going well. With structures like supervoting shares, founders could retain control forever. Curiously, Altman’s example was not the most famous one (Mark Zuckerberg at Meta); it was Musk and SpaceX. When Altman asked Musk about succession plans for OpenAI, he got a particularly “hair-raising” answer: In the event of Musk’s death, Musk said, “I haven’t thought about it a ton, but maybe control should pass to my children.”

I don’t know about that. But I do know that I saw a 2017 email from Altman to Zilis in which he wrote, “I am worried about control. I don’t think any one person should have control of the world’s first AGI — in fact the whole reason we started OpenAI was so that wouldn’t happen.” He went on to say that he didn’t mind the idea of immediate control and was open to “creative structures” — which I understood to mean that, in order to placate Musk, Altman was willing to give him control up to specific milestones in company development.

“I read a vague, like, a lightweight threat in there”

“My belief is he wanted to have long-term control and that he would’ve had that had we agreed to the structure he wanted,” Altman said on the stand. This sounds basically right. In later video testimony from Sam Teller’s deposition, we heard that Musk no longer invests in anything he doesn’t control. This also fits with Musk’s long-term fixation on making sure he can’t get booted from his own company the way he got booted from PayPal.

Musk also tried to recruit Altman to Tesla. We saw texts between Altman and Teller, in which Teller told Altman that Musk was committed to beefing up Tesla’s AI no matter what, and that he hoped that Altman, Brockman, and Ilya Sutskever would want to join eventually. “I read a vague, like, a lightweight threat in there, that he’s gonna do this inside of Tesla with or without you,” Altman said. But he felt that Tesla was primarily a car company — allowing it to acquire OpenAI would betray OpenAI’s mission.

Later, in Teller’s testimony, we saw texts Teller sent to Zilis at 12:40AM on February 4th, 2018: “I don’t love OpenAI continuing without Elon,” he wrote. “Would rather disable it by recruiting the leaders.”

When Musk stopped his quarterly donations, OpenAI was operating on a “shoestring” with an “extremely short runway of cash.” OpenAI did have other donors, none of whom have sued it or joined Musk’s suit. (One donor in the exhibit that wasn’t called out to the courtroom was Alameda Research, the firm owned by Sam Bankman-Fried, who is now in prison for fraud and money laundering.) Musk’s resignation from the board meant “people wondered if he was gonna try to take, uh, vengeance out on us or something.” On the other hand, Altman said Musk had “demotivated some of our key researchers” and done “huge damage for a long time to the culture of the organization.” So it sure seems like some people were relieved to be rid of him.

I’ve seen some fairly shoddy lawyering from Musk’s side throughout this trial

We saw a lot of evidence that throughout the time Altman was setting up OpenAI’s for-profit arm, he kept Musk apprised of what was going on, either directly or through Zilis or Teller. At no point did Musk object, and whatever he said publicly about the Microsoft investments, there was plenty of evidence that privately he’d been made aware.

On the cross-examination, we were treated to more than 10 minutes of Steven Molo telling Altman that various and assorted people had called him a liar: Sutskever, Mira Murati, Helen Toner, Tasha McCauley, Daniela and Dario Amodei (former OpenAI employees and founders of Anthropic), employees at Altman’s first startup Loopt, that recent New Yorker article, a book called The Optimist, etc. Molo did score some points by asking Altman about testimony in the trial, which Altman said he wasn’t paying close attention to. Molo acted as though this was inconceivable. Surely someone had informed Altman of what was said?

It was a little funny and also a little tiresome. Altman kept his cool, though, seeming hurt and confused by the focus on whether he was a liar. It was also the most successful part of the cross, which declined in focus precipitously afterward. I’ve seen some fairly shoddy lawyering from Musk’s side throughout this trial, and today was pretty bad. At one point, when Molo was trying to capitalize on Altman being both CEO and on the company’s board, Altman said — truthfully — that CEOs are almost always on the boards of the companies they run.

(At this point in my notes, I had written, “Boy, Molo is not very good at this.”)

The point of this trial isn’t to win — it’s to punish Altman, Brockman, and OpenAI

There was also an unconvincing argument about fundraising in nonprofits, specifically that if Stanford could raise $3 billion a year, OpenAI should have remained a nonprofit. Okay, let’s just think about that for a minute. Stanford has a donor network of thousands of graduates. It’s a school, which has very different capital requirements. It is not competing with any reputable for-profit companies. But leave that all aside and assume that some fundraising genius took over at the OpenAI Foundation: $3 billion is the initial two Microsoft investments combined, and not enough to scale OpenAI to where it is now. If compute is the main bottleneck on building AI models, then Molo’s line of argument suggests OpenAI never would have managed to be successful as a nonprofit alone. He’s making the defense’s case for them.

But the thing is, Molo doesn’t actually have to be good at this job, because the point of this trial isn’t to win — though I’m sure Musk wouldn’t mind a win. The point is to punish Altman, Brockman, and OpenAI. Musk has done that pretty thoroughly — reinforcing in the public’s mind that Altman is a liar and a snake. This morning, I read an exclusive in The Wall Street Journal that assorted Republican AGs and the House Oversight committee wanted to look into Sam Altman’s investments. References to the trial are peppered throughout the article.

So yes, Altman was convincing on the stand. He may even win the suit. But it sure seems like Musk’s vengeance has just begun.

Musk’s biggest loyalist became his biggest liability

2026-05-07T11:55:46-04:00

I sat down in the Musk v. Altman trial courtroom today, painfully aware that no one was going to ask Shivon Zilis the question on everyone’s minds: Girl, what the fuck are you doing?

Zilis, who testified under oath that she is the mother of four of Musk’s children, was… What’s the best way to characterize this? A Musk adviser? She denies she was a “chief of staff” but says she worked for Musk’s “entire AI portfolio: Tesla, Neuralink, and OpenAI” starting in 2017. The two met through OpenAI, and they had what she referred to as a “one off” before becoming “friends and colleagues.” The “one off,” she confirmed, was “romantic in nature.”

Her job under Musk was “to go find bottlenecks and solve them,” and she claims to have worked 80 to 100 hours a week doing that. “It was just bananas,” she said. Her first two children by Musk — twins — were born in 2021, while Zilis was serving on OpenAI’s board. She kept this a secret. She did not tell the board who the father was until Business Insider reported on court documents that listed Musk as the father.

“My first call was to my dad,” said Zilis, who testified that even her own family didn’t know the children’s paternity. “The call right after that was to Sam Altman.” Greg Brockman, OpenAI’s president, had testified he found out about Zilis’ children from news reports. When he talked to her about it, she claimed her relationship with Musk was “platonic” and that she’d had kids via IVF. This was reassurance enough for Brockman, who’d been friends with her since 2013. She remained on the board.

On the stand, Zilis spoke softly and quickly. She seemed mousy. A significant part of what made her testimony so bad for Musk was that she appeared to be the only person taking notes on what Brockman, Altman, Ilya Sutskever, and Musk were discussing when the cofounders considered their options for creating a for-profit arm of OpenAI. She also was “aiding and facilitating communication between the principal parties.” Those notes are the trial’s most important evidence — more important, even, than Brockman’s diary.

The goal of the direct testimony seemed to be to take the sting out of what Zilis and the plaintiff’s lawyers had to know was coming. So she told the court that her role also meant telling Altman when Musk was “in a good headspace” for a conversation — perhaps inadvertently strengthening Brockman’s testimony Tuesday that at one point he feared Musk would physically attack him — while vehemently denying that she funneled information to Musk.

It didn’t work.

Look, she and Musk testified they lived together and have a romantic relationship and four kids. She was originally a plaintiff in the suit. She kept her children’s paternity secret from her own father. All of those things would be reason enough to doubt her testimony about thinking OpenAI betrayed its mission during the chaos when Altman was fired by the board. She claimed that Microsoft CEO Satya Nadella said something to the effect of “we are above them, we are below them, we are around them” and described that chaotic period as being “terrifying.” (The quote was “We are below them, above them, around them.”)

But the notes are really what did Musk’s case in. Try as she might, Zilis couldn’t explain them away.

There were a lot of ideas batted around in 2017 and 2018. We saw a lot of Zilis’ emails from that period. Notably in one, an option was “switch to for profit in next couple of weeks (woah fast!).” Another email noted that a “complete non-negotiable” for Altman, Brockman, and Sutskever “is an ironclad agreement to not have Elon (or anyone) have absolutely [sic] control of AGI they create.” In another she wrote to Musk money manager Jared Birchall, “They say they will not move forward without a guarantee to switch away from him having control. You and I can argue that’s stupid all we want but they are holding firm on it.”

“If he hung around E perhaps it would force him to think about humanity more”

Zilis also knew about Musk halting donations before OpenAI did. On August 20th, 2017, she wrote, “Funding freeze: OpenAI is likely to realize this week that their $5M in Q3 is, albeit correctly, on hold. Unsure how this will impact negotiations but wanted to flag it since it’s likely to have a big psychological impact on them if they find out.” Musk told Brockman and Sutskever over a week later, on September 1st, that he’d pulled funding.

There were other machinations:

At one point, Musk seemed to have suggested that she, Sam Teller, and Birchall — two of Musk’s closest fixers — should all take seats on OpenAI’s board so that Musk would have control of the nonprofit. Zilis wrote to Teller that she didn’t share that with the OpenAI team.
In November 2017, Musk was thinking of creating a “world-class AI lab” inside Tesla. To that end, Musk offered Altman a board seat at Tesla.
Zilis wrote an email to Musk saying that to save him time she’d brainstormed some solutions for him. Three of them involved developing AGI at Tesla. One was making OpenAI a public benefit corporation subsidiary of Tesla. One was getting Altman as an “anchor” for TeslaAI.
My favorite of those solutions was: “Find a way to get Demis. Seriously…. Demis really does fanboy hard and I don’t think he’s immoral… just amoral. If he hung around E perhaps it would force him to think about humanity more.”
After hiring Andrej Karpathy, Musk asked for a list of top OpenAI people to poach.

We had already seen one of her text messages in the docket — the one where Musk leaves the board and she asks him whether she should remain “close and friendly” to continue funneling him information. In her direct testimony, she tried to put that in context: “They were going through this weird half-breakup,” she said. But in the cross, we found out that she didn’t remember that in her deposition.

“Your long-lost memories have been recovered,” said Sarah Eddy, the OpenAI attorney, in one of the trial’s funnier moments. Sure, Musk’s team objected and the objection was sustained, but we all heard it. In fact, it was one of several times Zilis seemed to have recovered memories she didn’t have at her deposition, memories that — coincidentally I’m sure — happened to be good for Musk’s case.

To be fair, Zilis performed the best under cross-examination of anyone we’ve seen so far, but she doesn’t exactly come across as truthful. And there was even more reason to be skeptical of her when we discovered how she left the board, which — according to her deposition — happened “because I picked up a call from Sam and he said, ‘I’ve heard Elon is starting a competitive venture’ and I said, ‘Well if that’s true, this is the time to resign.’”

Her primary allegiance was and is to Musk

Mysteriously, she had forgotten that call between the deposition and today. But she did seem to know that Musk was moving on AI when she texted a friend, who was in her phone as “Shahini Rubicon Fluffer.” (Incredible name. Thomas Pynchon will be so jealous.) “Have to resign OpenAI board btw,” she wrote. “E’s effort has become well-known.” Her friend didn’t seem surprised by the revelation. Zilis went on: “When the father of your babies starts a competitive effort and will recruit out of OpenAI there is nothing to be done.”

Zilis added that Musk “proactively apologized that he had pruned my friend network through this.”

Here’s what it added up to, as far as I am concerned: Her primary allegiance was and is to Musk. To believe she didn’t know about xAI, I would have to believe that despite their — at the time — three children and the time he spent with them every week, he never discussed it with her. I don’t believe that. Who would? There’s enough evidence in her meeting notes to suggest she routinely held back information from OpenAI on Musk’s behalf — xAI would be no different. I also don’t believe that she didn’t give Musk information about the Microsoft deals she approved while sitting on OpenAI’s board.

Musk didn’t have a problem converting the whole of OpenAI to a for-profit or kneecapping the charity by recruiting its strongest researchers. He didn’t mind the idea of subsuming it into Tesla in any of a variety of ways. The thing he did mind was not being in control of it. That’s what I took away from Zilis’ texts and emails.

Brockman and the OpenAI board were incredibly naive to allow Zilis to continue working there after learning of her twins’ paternity. But then, maybe no one expected someone so meek to be so devious. She was smart enough not to raise her voice or nitpick obvious questions during her cross-examination, so her bearing read as more trustworthy than anyone we’ve seen yet. It’s just that the overall takeaway from her written communications is that she’s put Musk first in her life. Everyone else — including, apparently, her own father — comes second. So on the stand, you might as well assume she’s saying what Musk wants to hear too.

OpenAI’s president does ‘all the things,’ except answer a question

2026-05-05T20:40:47-04:00

When the bromance sours, we all end up in court. | Image: Cath Virginia / The Verge, Getty Images

The strongest witness for Elon Musk’s case against OpenAI so far has been Greg Brockman’s journal. Brockman himself is running as a close second.

Brockman was called to the stand in a rather unusual way — he was cross-examined first, followed by a direct examination — and he had some serious high school debate club energy. There was a lot of “I wouldn’t characterize it that way,” “I wouldn’t say it that way,” and “That sounds like something I wrote. Can I see it in context?” When Musk’s attorney, Steven Molo, read some of the evidence aloud, Brockman would pedantically correct him if he skipped a word, even if that word was “a” or “the.” When asked if Microsoft’s $10 billion investment was the biggest financial event at OpenAI, Brockman replied it was the only $10 billion investment. Come on.

I have previously said that if you can define the word “epistemology,” you should not testify in your own defense. So the lawyer skipped a word — is it really worth taking up the jury’s time to tell us all that? Save being the world’s cleverest boy for your parents.

“that’d be pretty morally bankrupt”

This would have been bad enough. But the journal entries — a series of text files from his computer — were worse, because they were very clear about Brockman’s greed and opportunism at least circa 2017. Here’s one: “btw another realization from this is that it’d be wrong to steal the non-profit from him. to convert to a b-corp without him. that’d be pretty morally bankrupt and he’s really not an idiot.” Here’s another: “maybe we should just flip to a for-profit. making money for us sounds great and all.” There’s also this: “cannot say we are committed to the non-profit. don’t wanna say we’re committed. if three months later we’re doing a b-corp it is a lie.”

“It’d be wrong to steal the non-profit from him” is very close to Musk’s “steal a charity” line, I notice.

We haven’t finished the direct examination yet, so I’m sure we’ll be hearing something exculpatory about the events that inspired these entries. But between Brockman’s attitude toward the cross and the journal entries, I don’t think I’d trust him to watch my bag while I used the restroom.

Musk’s team is trying to paint Brockman as being greedy, which I buy. The infamous “What will take me to $1B?” from Brockman’s journal made an appearance. We established that Brockman’s stake in OpenAI’s for-profit was worth about $30 billion. Molo asked Brockman why he hadn’t donated $29 billion to OpenAI’s nonprofit arm if $1 billion was enough for him.

Why are we fighting about the fucking purple box?

Brockman could have said something like, “If I dumped all my holdings all at once, OpenAI would receive a lot less than $39 billion, because that’s how supply and demand works.” He might have said something like, “It’s an important signal to other investors for me to have skin in the game.” Or maybe, “That’s just my net worth on paper. It’s not real.”

He didn’t do any of this. Brockman replied with nonsense about how much the nonprofit’s stake in the for-profit was worth. Molo said that didn’t answer his question and asked again. We went back and forth on this for quite some time; the jury’s heads snapped to and fro as though they were watching a tennis match. Brockman never did answer the question.

No detail was too small to argue over. Molo asked if purple boxes were something OpenAI generally used to call attention to something important, and Brockman said no. Then we all read in the document that OpenAI generally used them in employee and investor paperwork to highlight important things. In my notes I have written, “Why are we fighting about the fucking purple box?”

Molo landed another major blow by bringing up the various deals that OpenAI had with companies Brockman had a stake in: Cerebras, CoreWeave, Stripe, and Helion Energy. Given the sheer number of companies that use Stripe, its OpenAI deal seems piddling — but the OpenAI commitments seriously matter to both Cerebras and CoreWeave.

“I do all the things.”

Brockman also has direct financial ties to Altman because of a compensation package he was offered when they started OpenAI. He holds a 1 percent stake in Altman’s family office, which Brockman got in lieu of Y Combinator stock because “we ran out of Y Combinator stock fulfilling other [employees’] offers.” In a 2017 email, Musk’s bodyman, Jared Birchall, writes to Musk that Altman disclosed that to him, and Musk forwards the Birchall email to Brockman with a “??” Apparently Musk didn’t know about the deal, and Brockman had to explain it.

I am dwelling on the various ways that Brockman made himself untrustworthy because it’s fun to watch powerful men squirm. But it also has colored my view of his direct testimony, which started afterward. Brockman began by telling a story of OpenAI’s founding that sounded like it had been polished for a thousand podcasts and keynote speeches. When asked what he did as the president of OpenAI, he replied, “I do all the things.” If we had not been in a courtroom, I would have screamed. Millennial vocabulary is a fucking tragedy.

In this telling, OpenAI was Brockman and Sam Altman’s idea. Brockman had told Altman about his interest in AI as he was leaving Stripe (“I’m thinking about doing an AI thing,” to which Altman apparently said, “I’m also thinking about doing an AI thing.”). They kept in touch. The original idea was purportedly to have a Y Combinator research arm, which Musk shot down because he didn’t want to be affiliated with Y Combinator.

Musk seemed “very consistent and fixated” on Hassabis

Imagine a montage of cozy dinners, trips to Napa (“our van got stalled for an hour and a half in traffic and no one noticed” because the conversation was so good), AI conferences. Gee whiz! It was so neat-o! Everyone got along so well and had such great creative energy! We were treated to a very long retelling of Ilya Sutskever waffling about leaving Google, and then a photo Brockman took of the first day of OpenAI, with everyone working from his apartment. (In the photo: Altman. Missing: Musk.) I think you get my drift; I certainly got Brockman’s. This was Altman’s and Brockman’s baby. It was only after Musk had done closing calls with the team that Altman and Brockman had assembled that Musk told them he wanted to be more involved.

Musk appeared in the testimony as a distant and at times menacing figure. At one dinner, he asked if Google’s Demis Hassabis was evil. In fact, Musk seemed “very consistent and fixated” on Hassabis, and never so much as mentioned Larry Page, who in Musk’s telling was the reason OpenAI came to be. In text messages from Sutskever to Brockman, Sutskever wrote, “Elon might spend half a day a week with us. I imagined how it will be and I worry that our work environment can become very stressful.”

Sutskever was correct to worry; Musk is famously difficult. I imagine we will hear more about that tomorrow. But as it stands so far, the jury will have to decide who of two not-especially-trustworthy men it trusts more. I don’t envy them the task.

Correction, May 5th: The Google AI head’s name is Demis Hassabis, not Denis.