How Do You Buy Shares in SpaceX? Ask Elon Musk’s Friends.
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Hey TMB listeners. Before we get started, heads up, we're going to be asking you a question at the top of each show for the next few weeks. Our goal here at Tech News Briefing is to keep you updated with the latest headlines and trends on all things tech. Now we want to hear more about you, what you like about the show, and what more you'd like to be hearing from us. This week, which areas of tech are you most interested in hearing more about? AI? Crypto? Tech

Tech policy? Gadgets? If you're listening on Spotify, look for our poll under the episode description. Or you can send us an email to tmb at wsj.com. Now, on to the show. Welcome to Tech News Briefing. It's Monday, April 28th. I'm Katie Dayton for The Wall Street Journal.

Today, we're reflecting on a very modern parental decision: the age in which kids should get a smartphone. there doesn't seem to be much of a consensus. Then, we're zooming in on SpaceX. Elon Musk keeps its inner workings as a bit of a mystery, and that opacity also applies to its investor base. We take a look at who exactly is getting a cut of the $350 billion business and how.

But first, what do you do when your kid wants a smartphone, but you're not sure if they're ready? WSJ columnist Sumathi Reddy recently found herself in that position when her 11-year-old daughter asked to join the ranks of nearly all of her friends with devices. The question brought up a fair amount of soul-searching for Sumathi, who joins us to explain. So, what do you do when your kid wants a smartphone, but you're not sure if they're ready?

So, Mithi, I'd love it if you could tell me a little bit more about your daughter and why she's pressing to get a phone right now. My daughter is 11. She's in sixth grade. And all of her friends, I would say, except for a couple, have phones. She's really one of the last ones standing. So it's been this sort of

Like, when am I getting a phone? When am I getting a phone? And she's a very sweet girl, so she's not, like, demanding one, but it comes up quite a bit. You write in the story that you're clinging to her phone-free days like a baby holds a mother. Why do you feel that way?

I guess the way I was thinking of it was like getting your phone is when like kids mature these days because they're exposed to all this more mature material. And, you know, I've noticed that like her and she has a couple of friends who don't have phones are like in some ways more not like childlike, but sometimes the things they do are more like play hide and seek or just don't involve looking at Snapchat and YouTube.

And do you think your daughter understands your reasoning for why you're a little bit hesitant to give her a phone right now? No, I don't think she quite understands the whole thing. And I do mention in the story that I have an older son who in many ways was very similar to her. He was this great kid, really sweet, great self-control, not someone who ever got in trouble or he wasn't addicted to video games or any of that stuff, screens. Once he got a phone, it did change him. I mean, as it does all kids and teenagers and adults,

And even though he had this great self-control, he's as addicted to his phone as anyone else or more. Since you gave your son his phone a few years ago, how much do you feel the conversation around kids and phones has changed, especially with other parents? Yeah, I mean, I think there's been so much research and so many studies about the detrimental effects, particularly of like social media and some of those sites, which the journal's done a lot of stories on as well, that people are just more aware of that. And even in writing the story, I got a lot of...

emails from parents that kind of signaled that the tide was turning a little bit, especially like in California. It seemed like I was getting a lot of emails being like, oh, we don't do that here. I have like a pact with these other parents. None of our kids have phones. We're all going to wait till high school. And you think, though, that you're not going to wait until high school at this point? You think it's going to be sooner rather than later that your daughter gets one? Yeah. I mean, once she starts taking this subway...

Going further afield, I feel like you kind of need a phone just to be able to look up subway delays and issues and reach your parents and friends more easily. So I feel like living in New York City, it's not really practical for us. Maybe if we live somewhere else, we could get away with waiting longer. But it's going to be hard doing that here. That was our columnist, Sumathi Reddy. Coming up, inside the complicated and secretive world of SpaceX's investor base. That's after the break.

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Friends of Elon Musk have a side hustle, selling access to stakes in his private companies, including SpaceX. The setups operate through a complex web of funds, allowing the company to remain private. Cori Dreebush was one of the reporters navigating the web to get the story. So, Cori, can you start by taking us through just how SpaceX has remained a private company, despite it being so old and sporting this incredibly high valuation?

Sure. So it is pretty rare for a company to remain private as long as SpaceX has, particularly one that is backed by venture capital firms. SpaceX's size and its stature for most companies would have forced it to go public, but not SpaceX. There's quite a few reasons why. For one, SpaceX's

by nature of the business, has government contracts and maybe some of the business that it does wants to remain private. It doesn't want to reveal all of these contracts and its financials, which as a public company must do. Another way SpaceX has been able to stay private is by limiting its investor base. The SEC requires that once you reach a certain number of quote-unquote holders of record in a company, right,

The company is legally required to disclose financial information regularly, similar to that of a public company. That number has grown. This famously is one of the reasons Facebook was forced to go public back in 2012. That was when the threshold was 500 shareholders of record. Post-Facebook's IPO, that was increased, and now it's 2,000, and SpaceX is skirting that. And one of the ways it does that is

is it keeps a tight control over its investment base by doling out the shares to existing investors. And then those investors in turn sell shares

interests in the shares and their funds through a spider web of funds, if you will, that are often structured as special purpose vehicles or SPVs. And so in that case, investors buy shares of holding companies that own the shares of SpaceX in this example. From what you gleaned from your reporting, why has Elon Musk kept it this way for so long?

Many CEOs, even public CEOs, would say they wish their company were still private. Think of a public company, every three months you need to report financial results. Also,

As a public company, you have a stock that trades every single day in the public markets. And your stock price really is at the whim of whomever is trading that day and whatever news or whatever feelings that people have. It's nice to say that stocks trade in line with the fundamentals of a company, but we know that that's not actually the case all the time. I mean, look at Tesla right now. Look at Tesla's stock price.

That has jumped wildly up and then fallen wildly down this year around Musk's kind of polarizing role in the White House doge or the Department of Government Efficiencies and overseas competitive pressures. Your piece runs us through a host of characters that are sort of the conductors of who gets a slice of SpaceX.

One of which is the investor Antonio Gracias. Can you tell me a little bit more about him and how he ended up in Musk's inner circle? Yeah, so Antonio Gracias and his Valor equity partners was one of the early investors in SpaceX. So

They've been invested for a very long time. And Gracius and Musk have become friends. What we learned through court documents is that their family spends Christmases together and they vacation together in the Bahamas and Jackson Hole, Wyoming. At one point in court testimony a few years back, Gracius said that he also invested directly in Musk himself and he extended a $1 million personal loan to Musk

And Gracia said that he couldn't recall if he had charged interest to him. So that kind of speaks to their level of friendship. Another one of the people you mentioned in the story is Luke Nosek. Can you tell us a little bit more about who he is and what he does?

Nosek is a SpaceX board member who also worked with Musk at PayPal before he joined Founders Fund in 2006. And he and Musk remain close. For instance, we learned from our reporting that they've attended game nights in Austin, Texas, where they play the game Werewolf together. Nosek, his fund is Gigafund. And

How Gigafund has worked in this story is that Gigafund purchases secondary sales of SpaceX and then they form their own funds and they sell interest in those shares. How did the people named in this story, including Musk, respond to your reporting? As we mentioned in our story, I've

Everyone we reached out to, all the investors we reached out to, either declined to comment or did not respond to requests for comment. What was your big takeaway from this reporting? When you think about this story, it's important to think about SpaceX in particular as a company. This is one of the largest companies in the U.S.,

And it's also extremely secretive. Its finances are hidden from all but a small group of investors and insiders. So most people with stakes in SpaceX, including those who buy into SPVs, they have no clue how much money the company makes or loses.

And yet the valuation of this company has grown astronomically over the years. And it stands to gain even more with Musk being so close to Trump administration officials, not just Trump himself. That was WSJ reporter Cori Dreebush. And that's it for Tech News Briefing. Today's show was produced by Julie Chang with supervising producer Melanie Roy.

I'm Katie Dayton for The Wall Street Journal. We'll be back this afternoon with TMB Tech Minute. Thanks for listening.