The Musk premium

We're coming up to the end of the first lock-up period on SpaceX shares.

But whatever happens next, the recent SpaceX IPO is the clearest example we have of executive visibility in action.

It makes me cringe to write this newsletter. Partly because the debate about SpaceX is saturated, and one of my rules of thought leadership is to avoid topics that have been talked to death. I'm breaking it here.

But mostly because I hate it when potential clients get in touch and say they want a profile like Elon Musk's. Jeez. It isn't just that Musk's profile is polarising. It's that you cannot magic a profile like that out of nothing.

Musk has built his over three or four decades, by building companies and running stunts pretty much weekly or daily. It's pretty much his day-to-day job.

It isn't just that Musk's profile is polarising. It's that you cannot magic a profile like that out of nothing.

That cannot be replicated in a six-month campaign. Go back to Zip2, Musk's first start-up, and all you would find is trade magazine features, if that. Zuckerberg's first media appearance was a two-minute hit on local TV.

But there is still something to learn here. It's that executive visibility has real value. And that value is not small.

The market capitalisation of SpaceX, and its extraordinary multiple on listing, is undoubtedly tied to the fact that it is led by Elon Musk, and that he is known to be a particular type of person who runs businesses in particular ways.

Whether that is because he is a genius, a visionary, or just good at hyping the markets is a secondary argument. His profile moves the value of the business.

This is usually where people start arguing about whether companies should be valued this way. Many people will say that it is unhealthy for a company to be so tied to the profile of its executive team.

Okay, sure, but it isn't my place to decide what should and shouldn't move a valuation. My role is simply to point out that this does. You can fight it, or you can get on board.

But if you decide to get on board, you need to get on board for the right reasons. The pay-off from an executive visibility campaign isn't always simply in the short-term acquisition pipeline. It's in the reputation halo it gives the company.

Or, to put it another way: do I think more people are buying rockets or Teslas because Musk runs the place? Almost certainly not. Arguably he has hurt sales. But his visibility has done something else.

The pay-off from an executive visibility campaign is in the reputation halo it gives the company.

It has projected the company into the public conversation. There is value in simply being known, and it is hard to measure in lead generation terms. But you can see it in the IPO.