From El Dorado to Mars the business of big promises

In the prospectus for SpaceX’s Initial Public Offering (IPO), there is a clause that would make any corporate lawyer with even a modest sense of humour raise an eyebrow. The board of directors has granted Elon Musk one billion restricted shares. Those shares will vest only if two conditions are met a market capitalisation of $7.5 trillion and “the establishment of a permanent human colony on Mars with at least one million inhabitants.” The word “Mars” appears 63 times in the filing, more often than “net income.”

For ordinary investors lacking such imagination, it is difficult not to smile. But perhaps that is precisely why we read about the IPO in newspapers while Musk is the richest man in the world. After all, the very concept of finance was born from humanity’s ability to tell stories about distant worlds, often somewhere between geography and science fiction.

If today’s investors seem obsessed with climbing aboard the Artificial Intelligence bandwagon, a few centuries ago the irresistible dream was gold. Sir Walter Raleigh, Queen Elizabeth I’s favourite courtier, became obsessed with El Dorado, the legendary city of gold that indigenous accounts claimed lay hidden somewhere in the forests of Venezuela. In 1595, he set sail with five ships and one hundred “gentleman adventurers.” He found nothing.

Upon his return, Raleigh published The Discovery of Guiana, a narrative prospectus describing a city on a saltwater lake as large as the Caspian Sea, ruled by a king who covered himself in gold dust each morning. He later admitted that he wrote it to “secure royal patronage.” It worked. In 1617, he raised £50,000 for a second expedition, which ultimately ended with his execution.

Adventures linked to the conquest of distant lands have always exerted a special pull on investors, who rarely resist the promise of boundless wealth. Along the imaginary journey from El Dorado to Mars, the power of such narratives has remained remarkably constant. Only the frontiers of imagination have changed. It is debatable whether the surface of Mars is any less alien to a 21st-century observer than the bays of Southeast Asia were to a Dutch merchant in the 1600s.

The world’s first joint-stock company was founded precisely to explore and colonise such distant worlds. The Dutch East India Company (VOC) was established in 1602 by the legislative assembly of the Dutch Republic. How did it persuade investors to finance voyages lasting months through unknown seas, with no guarantee of return? By promising spices, nutmeg, mace and cloves. Products that grew on remote islands in waters no shareholder would ever cross. At its peak, the VOC was worth what some historians estimate to be around $8 trillion in today’s money, more than four times the valuation SpaceX is seeking at IPO (though this comparison should be treated with caution, as comparing a 17th-century trading company with a 21st-century listed company is more complex than the figure suggests).

Yet not every promise of a new world has rewarded those who believed it. In Paris in 1720, everyone wanted shares in the Mississippi Company. The man behind the frenzy was John Law Scottish monetary theorist, professional gambler and convicted murderer. Through his connections and financial acumen, Law won the trust of Philippe d’Orléans, Regent of France, who desperately needed a solution to the debt crisis inherited from Louis XIV. The Regent gave Law control over the national bank, the mint and tax collection.

From that position, Law built an elegant and circular system. The state issued paper money through his bank; investors used that money to buy shares in the Mississippi Company; the proceeds flowed back to the state, reducing public debt. Holding the entire structure together was a single promise Louisiana overflowed with gold, silver and inexhaustible riches. The company’s shares rose by 1,900% within months.

The problem was that almost none of the buyers had ever seen Louisiana. It was largely swamp land, sparsely populated by a few hundred European settlers and devoid of any known mineral wealth. By December 1720, the bubble collapsed. Law fled France in disguise, died in poverty and left behind a financial crisis that would contribute, decades later, to the conditions preceding the French Revolution.

Yet the mechanism had worked. The impossible had been sold, purchased and converted into real economic consequences. Vast fortunes were made, and lost.

More recently, futuristic narratives have lost none of their power to attract capital. The frontier has simply shifted from geography to technology and even existence itself.

In 1901, Nikola Tesla persuaded J.P. Morgan, then the richest man in the world, to finance a 57-metre tower on Long Island. Officially, the project aimed to create a wireless communications system superior to that of Guglielmo Marconi. Morgan invested $150,000. Tesla later revealed his true ambition transmitting free electricity to the entire planet by using the Earth itself as a conductor. Morgan withdrew his support in a four-line letter. The tower was demolished in 1917, and the land was sold to cover a $20,000 debt.

Sometimes a scientific breakthrough becomes an object of worship before science has fully understood it. After Marie Curie’s discovery of radioactivity in 1898, radium became synonymous with vitality and energy. The logic was simple, and fatal. If radium emitted energy, surely it must be healthy. By the 1920s, consumers could buy radium creams, tonics, lipsticks, suppositories and even radioactive pillows. The most infamous product was Radithor, created by William J.A. Bailey, a Harvard dropout with no medical degree who nevertheless styled himself as “Doctor Bailey.” The product consisted of distilled water infused with radioactive isotopes. Bailey sold roughly 400,000 bottles before dying of bladder cancer in 1949. When his body was exhumed in 1970, it was still radioactive.

Among humanity’s enduring dreams, flight occupies a special place. The Wright brothers achieved it in 1903 at Kitty Hawk. From that moment, a new question emerged if humans could fly, why not do so from the comfort of their own cars?

No one embodies that dream better than Paul Moller. Since 1965, he has been trying to build a flying car. His company was originally called Discojet, a name that says almost everything. Its flagship product, the Skycar M400, featured three wheels, a bubble cockpit and eight rotary engines.

Over half a century, Moller raised tens of millions from private investors, faced SEC action over misleading statements about commercial prospects, declared personal bankruptcy in 2009 and launched an Indiegogo campaign in 2013 to fund what he called “the first historic manned flight.” The Skycar has never achieved free flight with a pilot on board.

The dream of a flying car almost seems modest compared with the missions embraced by some 21st-century companies. In recent years, technological progress has given rise to a growing number of businesses whose stated missions contain distinctly messianic or even eschatological undertones, positioning themselves as vehicles for saving humanity.

OpenAI was founded to “ensure that Artificial General Intelligence benefits all of humanity” initially a non-profit organisation (from 2015 to 2019) building what many regard as the most potentially transformative – and potentially dangerous – technology ever created, in order to make it safe. Critics argue that this original vision has gradually given way to commercial imperatives.

Anthropic, founded by former OpenAI employees concerned about AI safety, exists to build safer AI. The paradox is embedded in the company’s very rationale.

Neuralink seeks to implant chips into the human brain to enable a “symbiotic human-AI relationship.”

Ginkgo Bioworks set out to “program living organisms as easily as software.” After going public in 2021, its valuation fell sharply.

Calico, part of Alphabet, was founded in 2013 with the ambition of understanding and combating the biological processes of ageing – effectively, to “solve death.” It has spent billions, published relatively little and death remains unsolved.

Altos Labs, backed by Jeff Bezos, is pursuing cellular rejuvenation and radical life extension.

Unity Biotechnology aimed to cure age-related diseases and saw much of its market value evaporate after disappointing clinical results.

A common thread runs through all these visions. The underlying narrative structure has changed little since the era of the East India companies. A distant horizon – whether geographical, technological or existential – is established to justify investment. In the meantime, enormous amounts of money can be made.

This logic, blending the Protestant work ethic with Silicon Valley philosophy, remains one of the driving forces behind major market themes today, including the race for AI.

Robert Shiller, winner of the 2013 Nobel Prize in Economics, spent years formalising something market participants had understood intuitively for centuries finance is, in many ways, an epidemiology of stories.

In Narrative Economics, Shiller argues that the human mind evolved to respond more strongly to stories than to data. By this logic, a recession is not merely an economic event. It is a moment when a story about a fragile future becomes dominant and causes millions of people to spend less at the same time.

The reverse is equally true. Speculative booms are fuelled not only by returns but by narratives capable of influencing reality before reality has had time to confirm or deny them.

At its deepest level, finance is a system of trust mediated by stories – a pantheon filled with illusions that became visions, and visions that became illusions. There is no formula for distinguishing between the two.

Perhaps the difference lies in whether the implicit contract between story and reality continues to hold. Trust survives as long as reality and narrative keep moving closer together. It collapses when they drift irreversibly apart.

John Law understood this, in his own way, on that morning in 1720 when he disguised himself to flee Paris. Elon Musk, with rockets launching every few days from Florida, is still keeping story and reality aligned – at least for now.

This article was written by an independent financial journalist in collaboration with Moneyfarm. It is provided for informational purposes only and reflects the personal views of the author. It does not constitute investment advice or a recommendation to invest.