Co-founders Out, IPO Near: Elon Musk's Lunar Diversion

Elon Musk recently convened an all-hands meeting with xAI employees to discuss the company's future trajectory, particularly its ambitious lunar aspirations.

As reported by The New York Times, which claims to have privy to the meeting's details, Musk informed his team of the necessity for a lunar manufacturing facility. This envisioned moon-based factory would produce AI satellites and launch them into orbit using a colossal catapult. "You have to go to the moon," he declared, asserting that this initiative would enable xAI to achieve unparalleled computing power compared to competitors. He further mused on the implications of such advanced intelligence, stating, "It’s difficult to imagine what an intelligence of that scale would think about, but it’s going to be incredibly exciting to see it happen."

Musk's presentation, however, reportedly lacked clear details on the practical construction of these lunar facilities or the structural reorganization of the recently merged xAI-SpaceX entity, which is also reportedly heading towards a monumental IPO. He did, with evident pride, acknowledge the company's dynamic state. Citing The Times, he conveyed to his employees, "If you’re moving faster than anyone else in any given technology arena, you will be the leader, and xAI is moving faster than any other company — no one’s even close." He then added a reflective note, suggesting that "when this happens, there’s some people who are better suited for the early stages of a company and less suited for the later stages."

The precise impetus for this all-hands meeting remains ambiguous, though its timing is notably intriguing. Just a day prior, xAI co-founder Tony Wu announced his departure, swiftly followed by another co-founder, Jimmy Ba, who reported directly to Musk, also confirming his exit. These recent resignations bring the total to six of xAI's twelve founding members who have now departed the nascent company. While these separations have been characterized as amicable, the prospect of a SpaceX IPO reportedly targeting a staggering $1.5 trillion valuation as early as this summer suggests significant financial benefits for all involved, even upon their departure.

This focus on the moon marks a relatively new strategic direction. For the majority of SpaceX's 24-year history, Mars had been the ultimate objective. However, this past Sunday, prior to the Super Bowl, Musk unexpectedly announced via a post that SpaceX had "shifted focus to building a self-growing city on the Moon." He justified this pivot by asserting that a Mars colony would require "20+ years," whereas a lunar settlement could be established in half that timeframe.

This represents a substantial strategic reorientation for a company that has, to date, not launched any missions to the moon.

Whether based on rational analysis or otherwise, investors appear significantly more enthusiastic about the concept of orbital data centers than about establishing colonies on other planets, a venture with a notably extended timeline even for patient capital. Yet, for at least one xAI venture capitalist who spoke with this editor last year, these lunar ambitions are not driven by Wall Street interests nor do they divert from xAI’s fundamental mission; rather, they are considered integral to it.

This venture capitalist's theory posits that Musk has consistently pursued a singular objective: developing the world’s most potent "world model" – an AI system trained on proprietary real-world data, beyond mere text and images, that competitors cannot replicate. In this integrated vision, Tesla contributes data on energy systems and road topology, Neuralink provides insights into brain activity, SpaceX offers expertise in physics and orbital mechanics, and The Boring Company adds subsurface data. The inclusion of a moon factory, in this context, begins to reveal the contours of an extraordinarily powerful system.

The feasibility of this ambitious vision remains a significant question, as does its legality. The 1967 Outer Space Treaty expressly prohibits any nation—and by extension, any private entity—from asserting sovereignty over the moon. However, a 2015 U.S. law introduced a notable loophole: while ownership of the moon itself is disallowed, the right to own resources extracted from it is permitted. Mary-Jane Rubenstein, a professor of science and technology studies at Wesleyan University, elaborated on this distinction to TechCrunch last month, describing it as somewhat illusory. She stated, "It’s more like saying you can’t own the house, but you can have the floorboards and the beams. Because the stuff that is in the moon is the moon."

This particular legal framework appears to underpin Musk’s lunar ambitions, despite not all global powers, notably China and Russia, adhering to these specific interpretations. Concurrently, as the team initially envisioned to realize these goals continues to shrink, uncertainty looms regarding who will support this endeavor and, more immediately, whether his recent all-hands meeting provided clarity or merely generated further inquiries.