Forget the forays into politics, Elon Musk’s forays into space are far more significant

The IPO of Space X  at a valuation of $1.75t shows how much that underestimated him. His business model is not just autonomous cars but also the satellite systems to track and connect them and the rockets to launch the satellites. His business rival, Jeff Bezos, has a similar model though based on satellite systems to connect our houses not our cars. And unlike Bezos, Musk has a bold vision behind all that – to enable humanity to become genuinely extra-terrestrial.

His plan to get to Mars is very different from classic NASA missions.

He is not envisaging a lone spacecraft on a unique mission to Mars. He is planning to send convoys of craft. One craft might have the human crew, others may have fuel or food or spares. One of his team told me they planned to send successive missions in groups of 15. Last week saw the successful test launch of his prototype Starship rocket, bigger and more powerful than any previous rocket. Each rocket will lift about 100 metric tons, more than the total weight lifted by all space craft in the year 2000. He plans to produce them in an automated factory in Texas– one of the biggest structures in the world. The aim is to produce them at the rate of at least one a day. This is a further exponential shift in rocket launch capacity.

The sheer boldness of his vision seems far removed from modern capitalism but the technologies he has created to deliver it are of enormous value.  Space X is a valued at over half of the $3b value of the top 100 companies on the London Stock Exchange.

There are significant lessons from Musk’s extraordinary business achievements.

First is the role of Government in promoting new bushiness and new technologies. The US is very good at Jeffersonian rhetoric of sturdy individualism and limited government. That is what Conservatives get when meeting fellow Conservatives in Washington DC. But it is not actually how America works. British businesses instead see federal and state support for American companies and protectionist procurement going way back before President Trump’s tariffs. The truth is that behind the Jeffersonian rhetoric the USA is an interventionist Hamiltonian state. Space X would not have got to where it is without very substantial NASA grants and Government contracts to buy goods and services long before they could actually be delivered. Such advance contracts have been very difficult to get in Britain though Rishi Sunak did legislate to make it easier.

Secondly, we sometimes beat up on our technologists and start-ups as somehow inferior. But we have some excellent performers. When he was starting Musk took shares in Surrey Satellites, spun out from the University of Surrey,  to see what new space enterprises were like. He learnt in Guildford that you could save money by taking low cost components developed for terrestrial use and working out which ones would work in space.

Musk believes in vertical integration and not long globalised supply chains. Most of his key components are designed and made in house. However he does use outside suppliers when he cannot match their performance or cost. These suppliers know that Musk may well try to match their performance and bring their product in-house unless they can show they are consistently better. Britain’s Filtronic, based in Sedgefield in Durham, has achieved this. It supplies key high performance components for space communications to Space X. Its share price has risen 4,000% in the last five years.

The trouble is that British markets and investors find it hard to grasp this kind of technical achievement. It may because of early specialisation, the bane of English education, so senior decision-takers often have little knowledge of science and tech and few opportunities to learn. Instead powerful minds go into ever more sophisticated financial engineering. British technologists are much more likely to be asked by investors about cashflow forecasts than about exactly what their technology can do and why it matters. Hence the shrewd advice to tech CEOs – if you are raising money in England take your CFO if you are raising money in the US take your CTO.

We ought to be doing better at investing in British high-tech start-ups. One of the problems is that our pension savings are held in small pots which tend to be invested very cautiously. It is bigger pension funds which are likely to set aside some of their money to invest in VC and technology investment. That is why successive Governments have tried to aggregate local government pension schemes.

We also need to break the assumption that the key aim of pension investors must be to hold down charges – then funds only invest close to the overall index and there is little scope for trying something a bit bolder even though for example venture capital funds and investment in new technologies can make very substantial returns. Baillie Gifford in Edinburgh are the lead British investor in Space X.

It is ironic that literary festivals were pressured to stop partnering with them because of their tenuous links to fossil fuel when we should see in the next few weeks that their holdings in Space X have made excellent returns for British investors. They should be praised for making British people better off with that smart investment in technology.

We need far more of that.