Former SEC Chair Gary Gensler Talks SpaceX IPO, AI Boom

**SPEAKER_1** (0:02)
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**Romaine Bostick** (0:07)
Joining us right now is the former chair of the CFTC, the former chair of the SEC, former banker at Goldman, and now a professor lecturing on quite an array of things in the world of Wall Street and technology. Great to see you, Gary Gensler.

**Gary Gensler** (0:20)
Great to be with you, Romaine. Sorry, Katie couldn't be with us as well.

**Romaine Bostick** (0:24)
She could not. She sends her best, and I'm actually gonna start with a question that she actually raised. And this surrounds the SpaceX IPO and the corporate governance structure, which we learned from the S-1. And we are awaiting an updated S-1 filing later today that will give us a little bit more clarity about what this is going to look like.
I do wonder, given your past at the SEC, given the work you did on Sarbanes-Oxley, would this IPO have seen the light of day under the previous regulatory regime?

**Gary Gensler** (0:51)
I haven't looked at it with that in mind, but we have a great capital markets in the US and we basically say that we're merit neutral, whether it's under Democrats or Republicans, it doesn't matter, it's merit neutral, as long as there's the full disclosure about the material risk. And there are a lot of material risks when you're trying to offer something to the public at around 100 times revenues. That's not 100 times earnings, it's 100 times revenue. So, it's really about whether there's all the material disclosures, and particularly around the governance, as you said.

**Romaine Bostick** (1:29)
Well, I mean, in fairness, the disclosures are there. I mean, it's a pretty intertwined ecosystem of Elon Musk's interests and properties. So, fair enough to that. But then when you start to go through some of the regulatory sections out there with regards to independent audit committees, independent paid compensation committees, self-dealing, loans, things like that, there do seem to be a lot of issues with regards to what we've seen in that S1 filing, and why it's able to get to market without those being addressed.

**Gary Gensler** (2:04)
And many companies have had control shareholders take things public, but this is one where it's really even more, one might say, dominated by that control shareholder. And so anybody investing in it has to sort of really take that risk in mind.

**Romaine Bostick** (2:23)
Are we reading too much into this one particular IPO? We've had several other IPOs this year that haven't run into these issues.

**Gary Gensler** (2:30)
I think it's a remarkable year when we see that SpaceX, Anthropik is apparently now filed, OpenAI wants to tap in all these, I'll call them mega IPOs.
And yet Google also is tapping the market for $80 billion of fundraising. So we've got 85 billion.

**Romaine Bostick** (2:50)
They've actually raised it because of demand.

**Gary Gensler** (2:52)
There we go. There we go. Look, we are in this AI boom. And the question on investors mind, is it a bubble? But we're in this AI boom where we're spending as a nation, $750 billion on AI infrastructure. That's tripled in just two years.
And I think that each of these three companies, SpaceX, OpenAI, Anthropic, want to tap in to that enthusiasm. And if I were their bankers back at Goldman Sachs, I might say, you want to tap in when the mood is there. But you just talked about private credit earlier, and there's deep valuation questions and concerns in private credit and private equity, in part because if AI is disruptive, it's going to probably destroy some value.
And here, these three big companies still have to figure out a revenue model.

**Romaine Bostick** (3:48)
Yeah. And look, I mean, we've had numerous IPOs over the years in the US where companies have come to market with maybe not a fully articulated long-term business model, and that hasn't stopped them. And some companies that have gone on to great things, think about Amazon, Meta, a lot of questions surrounded those companies when they came public, and they've proven themselves over time. When you look at the AI boom, or at least the interest in it right now, do you look at the technology itself, just set aside the money for a second, the technology itself as being really transformative of our society, economy, whatever?

**Gary Gensler** (4:19)
I'm at MIT.

**Romaine Bostick** (4:20)
Yes. And you teach a class on AI and money.

**Gary Gensler** (4:23)
I teach a class on AI and money. Simon Johnson and I have this Power and Consequences podcast. We talk about AI like every 4 or 6 episodes because it just... Yes, I think it's really transformative, but Romaine, if you look at the last 200 years of transformative technologies, you pick your favorite 8 to 10, from canals to this.