The Trillion Dollar Question

A few weeks ago, SpaceX went public with the largest IPO in history.

It priced at $135 a share, raised roughly $75 billion, and debuted near a $1.8 trillion valuation. By one measure, that put the stock at about 125 times revenue.

125 times revenue is an incredibly high valuation.

For reference, most businesses trade between one and three times revenue. A good software company might trade at ten or fifteen.

SpaceX is obviously not most businesses.

So what were investors actually buying?

SpaceX is not a monolithic business.

In addition to their rocket launch services, there are satellites and internet through Starlink and AI infrastructure and services via xAI.

Consider what SpaceX has already done:

• Reduced the cost of transporting one kilogram of payload into space from $54,000 to $1,500 thanks to reusable rocket technology

• Now carries approximately 85% of the world’s total payload mass into space every year

• Starlink currently only serves 12 million customers across 160 countries but is growing at almost 100% per year since operations began in 2023

• xAI operates the Colossus supercomputer, one of the largest AI training data centers in the world

But even these distinct businesses contain economic engines that not only generate value alone but leverage each other today and into the future.

Those core economic engines for SpaceX are:

• Launch Services

• Satellite Connectivity

• Compute Infrastructure

Some of those engines are already producing immediate value while others are have not. Starlink generated $11.4 billion in 2025, up roughly 50% in a year. The AI unit burned through billions in a single quarter and posted steep losses.

Investors don’t pay for what the business is today, but for the potential of the economic engines behind the business.

For example, if data centers in space can overcome many of the bottlenecks of terrestrial ones, the total market could be in the trillions in a few short years.

SpaceX is positioned like no other company to dominate that market.

Your business has its own engines at a smaller scale.

Do you know what they are and how many?

Do you really understand what your business does for customers?

The question is whether it's actually an engine, or whether it's something that only looks like one.

How do you know?

The following three questions will help you figure it out.

Do They Run Without You?

If any of your engines are powered like a bicycle you have to pedal, it won't be valued as high.

A bicycle moves only while you're turning the cranks. Stop, and it stops. Plenty of profitable businesses are like bicycles. The owner is the engine, and the moment they step off, the output drops to zero.

Classic examples are many service businesses such as medical practices. There is still value there, but when economic value is generated only while the owner works, the business garners lower multiples.

This is the classic situation where owning a business and having a job blur.

Software is the other extreme. It generates revenue without the owner. Of course it takes effort and energy to build and to keep the service running, but it mostly runs itself once deployed.

Those are simple examples to illustrate the two extremes. Most businesses fall somewhere in the middle.

Consider a bakery owner who has stepped out of the retail kitchen to run the catering side. The retail counter keeps selling whether they are there or not. The catering, which they personally pitch and book, stops the day they stop. One engine runs without them. The other is still a bicycle.

Do this simple exercise. List every revenue generating part of your business and what percentage of the revenue would disappear if you didn't touch it for three months.

Low percentages are a business. High percentages are a job.Claude Fable 5 is currently unavailable.

Do They Compound?

Engines that run on their own are better than ones that don’t.

Engines that expand themselves or other engines within your business over time are even better.

Engines that don’t compound run without you, but each new dollar costs about the same to produce as the last one. Double the output and you roughly double the cost to run it. The machine is steady but it doesn’t provide real leverage.

A staffing firm is a good example. It can run reliably and recur for years. But adding revenue means adding people, and the math barely changes as it grows. It runs but doesn’t compound.

Compounding is when growth makes the engine more efficient, not just bigger.

Software is the easy example again. The first customer costs a fortune to serve. The ten thousandth costs almost nothing. Every new user spreads the same build cost thinner and often makes the product more valuable to everyone already using it.

Most businesses fall somewhere in between.

Consider a regional HVAC company. The install side is a solid recurring engine, assuming employees are doing the work. Every job needs trucks, parts, and labor in roughly fixed proportion. But the service contracts compound. Once enough customers are under contract in one area, the routes tighten, each technician covers more stops per day, and the cost to serve every additional contract drops. Same business, two engines, one spinning and one compounding.

Do this exercise. Take the engines from the last test and ask one new question of each. As this grows, does it get cheaper or more valuable per unit, or does it stay flat?

Flat engines are good. Compounding engines are where the real value hides.

Would They Run For Someone Else?

An engine someone else can run is an asset. An engine that only know how to run is a liability in disguise.

An engine in your business can run without your daily effort and even compound as it grows, but if it holds together only because of your relationships, reputation, judgment, or knowledge there is less to hand over. There is just you, and you are not for sale.

A consulting firm shows the problem clearly. The work recurs. The margins can be excellent. But if every client signed because they trust the founder, and every engagement runs on the founder's instinct, the engine walks out the door the day the founder does. Buyers know this. They pay accordingly.

The other extreme is an engine built on systems. A franchise is the obvious case. The whole model exists so that a stranger can run the same engine and get the same result. The value lives in the process, not the person. That is why it transfers.

Most businesses sit between the two.

Consider a landscaping company. The crews and their routes can survive an ownership change easily, if the work is documented and the customers are on recurring contracts. But the largest commercial accounts, the ones the owner personally won over a decade of golf and goodwill, are far shakier. One engine belongs to the company. The other belongs to the owner.

Do this exercise. For each engine from the first two tests, ask another question. If I handed the keys to a competent stranger tomorrow, would this keep producing?

The parts that survive are built on systems, documentation, and relationships that belong to the business. Those are the engines a buyer pays a premium to own.

The parts that collapse are the ones still tied to you and will incur a discount.

The Next Step

Whether or not you agree with SpaceX's valuation, there are legitimate growth engines in the business that are compounding at incredible rates. Whether they are sustainable and will grow into their enormous valuation remains to be seen.

For many business owners the opposite sticker shock occurs. They have a large number in their head that is usually way above what the market perceives when they go to sell.

Why? Because they don't understand the nature of their own business' growth engines and whether or not they're transferable.

Walk every revenue line through the three questions:

Do they run without you?

Do they compound?

Would they survive someone else running them?

The difference is whether you're able to eventually sell your business at all, or whether it sells at a premium or a discount.

The hard part is seeing your own engines clearly. Owners are too close to their business to judge which parts would survive a buyer's scrutiny and which would not.

That outside view is what I built Valotare for. It assesses your business the way a buyer would, so you can see which engines carry real value before you ever go to market.

Valotare Beta

If you or someone you know is any one of the following:

• Business owner who is considering selling (even if they’re curious or may not be selling for several years)

• Business buyers

• Business brokers

I would love to have them try Valotare for free in exchange for feedback and a review if satisfied.

Forward them this issue of the Leap or send them to the following link:

Valotare Beta

My goal with The Leap is to provide you each Saturday with the knowledge, tools and lessons learned to help you get started and keep going toward building your future. 

Whether you are making the leap to startups, solo-entrepreneurship, freelancing, side hustles or other creative ventures, the tools and strategies to succeed in each are similar.