Date: 08/31/2021
Author: Mr. X
Stephen Bown’s Merchant Kings: When Companies Ruled the World, 1600 to 1900 is a must read for those who seek to be men and women of power. It chronicles larger than life merchant-adventurers and explorers at a time when the line between “warrior” and “capitalist” was thin. Titans like Cecil John Rhodes, Clive of India, Jan Pieterszoom Coen, and others built the modern world. Of course, some would say they also ruthlessly trampled anyone who got in their way.
Today, we have another age of heroic commerce. You can’t separate Amazon [AMZN] from Jeff Bezos, Tesla [TSLA] from Elon Musk, or the Virgin Group from Sir Richard Branson. They haven’t just taken business risks, but personal risks. Jeff Bezos and Sir Richard have both risked their lives to travel to space (or at least suborbital space). Musk repeatedly tweets about the need to make humans a multi-planetary species, and it’s hard to believe he won’t make a trip himself when the time is right.
These men don’t command private armies like the merchant kings of the past. Yet they share some of the best – and worst – traits of “heroic” capitalists. Obviously, all are intelligent, work fanatically hard, and seem to be driven by a sense of mission. Of course, they have also been accused of being exploiters. The working conditions at Amazon and attempts at unionization are a regular feature in mainstream media. Some condemn Musk for allegedly exploiting his own workers. (I think everyone agrees he’s careless – at best – with his tweets.) Sir Richard tends to get better PR, but even he’s been accused of working with regimes in the Middle East that don’t have a great record on human rights.
The fiercest rivalry is between Bezos and Musk. The battlefield is space. Elon Musk’s SpaceX has established itself as a leader in commercial space and operates almost as a quasi-public institution aligned with the government. Just last weekend, SpaceX had another successful launch with supplies for the International Space Station. SpaceX also won a $2.9 billion contact to build a lunar rover for America’s return to the moon.
SpaceX is also a highly effective delivery system for Starlink, a satellite Internet constellation that could potentially deliver broadband Internet around the world. So far, about 1,735 Starlink satellites have been launched into orbit. To put it in perspective, there were just 60 on May 24, 2019.
In contrast, Jeff Bezos’s Blue Origin is struggling. Several of its employees left. In an especially cruel blow, engineer Nitin Arora reportedly joined SpaceX.
Amazon also has a broadband satellite internet constellation, Kuiper Systems. Though it is not formally a part of Blue Origin, the link is obvious. Yet here too Musk’s Starlink is clearly beating Kuiper Systems so far.
In response, Jeff Bezos has turned to lawfare. Blue Origin first tried have the General Accounting Office overturn SpaceX’s NASA contract. When that didn’t work, Blue Origin sued in the U.S. Court of Federal Claims. This will probably postpone America’s return to the moon.
There’s also a regulatory battle brewing over Starlink. SpaceX recently filed for FCC approval for a second generation of satellites. In response, Project Kuiper filed a protest, arguing that SpaceX had violated the rules by putting forward two possible configurations, even though it will ultimately use only one.
In response, Elon Musk tweeted the following:
Meanwhile, Sir Richard’s Virgin Orbit, which focuses on suborbital flights like the one he took, is going public via a $3.2 billion SPAC deal. Again, Bezos is behind, with Virgin beating Blue Origin in the “billionaires to space” contest.
What’s thrilling about this competition is that it involves three men and three brands that it never pays to short against. Yet there can ultimately be only be one winner. Thus far, Bezos appears to be the weakest, relying on the courts and regulatory agencies to handicap his competitors. This may prove to be a dangerous strategy.
Of the three brands, Amazon [AMZN] may be the most vulnerable to political action. Musk himself may be polarizing and has a tendency to tweet himself into disaster. However, Amazon [AMZN] as a whole is already in the crosshairs of some progressives. If Donald Trump decides to make another run for the presidency in 2024, incredible as it seems, he remains the favorite for the nomination. The former president has never been shy about his dislike of the company.
For that reason, rather than trying to slow competitors down, Bezos should be trying to speed Blue Origin up. One of the most impressive things he did upon returning from space was to literally offer NASA $2 billion for the moon contract, at a stroke throwing away any argument SpaceX could make about cost. He doesn’t need to wait for any government or regulatory agency to do anything but give him permission to act independently. Does the founder of Amazon seriously expect people to believe complaints about someone else having a monopoly?
Currently, Elon Musk’s SpaceX and Starlink have a decisive lead in commercial space ventures and a satellite constellation for Internet access. Sir Richard Branson seems to have the edge in suborbital commercial flight. Bezos’s best move at this point is audacity, not complaints. Besides, in an industry that will initially depend heavily on deals with the government and the military, any actions that slow down Uncle Sam won’t help Bezos win contracts in the future. L’audace, l’audace, toujours l’audace, especially when it comes to an entirely new industry.
Like the great merchant kings of the past, Sir Richard Branson, Elon Musk, and Jeff Bezos will always be figures of controversy. Some people will hate them forever. Yet if they have sufficient daring, they can live on forever, I’d argue infamy is better than oblivion.
They also hold a lesson for all of us. Even retail traders should approach each morning not as just another workday but as another opportunity to expand their own empires. The age for heroism isn’t over. It’s beginning anew.
Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com three times a week to bring you news on what those with power are debating, planning, and doing.
