SpaceX IPO: Inside the Firm That Owns 1%

0:00137 Ventures. 137 Ventures. Justin Fishner-Wolfson, co-founder and managing partner. 137 Ventures.

0:06Justin Fishner-Wolfson:137 Ventures, you have$15 billion AUM. You invested into SpaceX, Palantir, Uber, Andrel, Gusto, Cognition, Ramp, and Hadrian. Those are some of the bigger positions. Tell me about the story of SpaceX. Back at Founders Fund, we did the deal in 2008. At that point, Elon had mostly funded it himself. We were really the first outside institutional capital. We probably made two dozen investments in the company since we started the firm. It's been a great run. companies from a life cycle perspective are starting to go public again. SpaceX is the big one to kind of start this, but OpenAI and Anthropic are both valid.

0:36S1's confidential, so it's going to be a pretty interesting few quarters in the public markets.

0:51Justin Fishner-Wolfson:Justin Fishner-Wolfson, also known as JFW. apparently apparently everybody I've been talking to is just keeping your name short I mean most people don't use my phone name when they call me well welcome to sorcery I'm so excited to have you on today thank you for having me you just got fresh off of a New York Times interview yeah so you're all warmed up right uh sure let's see how it goes okay so I recently interviewed the team at impulse space um we had tom muller on and we also had eric romo the first employee and the 13th employee and the one thing that eric romo said was if you don't know 137 ventures you will know it very soon well he's a good hype man i guess so 137 ventures you have 15 billion aum you've invested into some very large names you have over 60 portfolio companies.

1:48Justin Fishner-Wolfson:And I'm going to name some of the big names. Okay. So you invested into SpaceX, Palantir, Uber, Andrel, Gusto, Cognition, Ramp, and Hadrian. Those are some of the bigger positions. The one I want to talk about first before we get into everything, and obviously your differentiation going in on the secondary angle, is SpaceX. Sure. Okay. So tell me about the story of SpaceX. You got in it quite early. You were first exposed to it at Founders Fund. So what What was the story there? Well, back at Founders Fund, we did the deal in 2008. That was sort of the beginning because at that point, Elon had mostly funded it himself.

2:28And we were really the first outside institutional capital. And so, you know, obviously got to know the company back then, was very excited. When we started 137 Ventures, we continued to invest really many times over the last 16 years. So I don't actually know what the total count is, but we've probably made two dozen investments in the company since we started the firm. So it's been a great run.

2:50Justin Fishner-Wolfson:Film Courageous And why did you go after the secondary angle? How did you have conviction in that early on? I think the insight that we had, if you kind of roll back the clock to like 2011, that was right before Facebook had gone public. And our belief was companies were going to stay private longer. Facebook stayed private for a relatively long time. But the major reason why Facebook ended up going public was this 500 shareholder count rule that basically required companies once they hit a certain shareholder count to publicly report. So it was sort of all the negatives of being a public company with none of the positives.

3:23And ultimately that's why Facebook went public. They changed the rules with the JOBS Act. And so that pressure to become a public company sort of went away. And I think our view was very simply that companies were going to end up staying private longer. And what that meant was there'd be a lot more opportunities to invest in those businesses, especially if they were great companies, then that was just a lot more time they could compound. Going back to the SpaceX point, like SpaceX always sort of allowed liquidity for their employees and they were running tenders, you know, once a year probably back then.

3:54And then that kind of sped up to twice a year. And so like these were always company organized programs. It wasn't like you're trying to find some random person who happens to, you know, be affiliated with the companies. Like you're just dealing with the founders and executives of these businesses who are trying to facilitate liquidity for people to buy their first house or pay off their student loans or whatever it happens to be.

4:14Justin Fishner-Wolfson:I mean, that's a huge theme that's happening right now because there's so much locked up capital. We're obviously having some major IPOs, whether it's SpaceX, the new S1s with Anthropic, OpenAI, and a lot of the AI companies here in the Valley, we're in San Francisco right now, With massive valuations and a lot of people that are rich on paper but cash poor and like strategically, what does that mean to a founder? Not just to take off money for fun money, but like after working for a while. Honestly, I don't think anyone, I don't think I've ever seen anyone take money for fun money. The best story is actually like from Will Brewey because he was, he's the founder at Varda, but he was also at SpaceX.

5:00and so he sold in a tender a very long time ago. And I may butcher the story, but it's approximately some version of like, he went to a Lakers game and he got some cash in the tender, went to a Lakers game and bought parking passes. And those parking passes are now very expensive parking passes given how well the SpaceX is done. But like, you know, it was just like a small thing for him to be like, okay, this is real. Like it matters. But most of the time it really is, it's how people buy their first house or student loans. Sometimes there are unfortunate stories where it's like people have medical issues.

5:34And so the money is important because people have life events that matter.

5:38Justin Fishner-Wolfson:How did you have so much conviction to spin this out of Founders Fund and do this whole strategy? I mean, I think more deeply. Sometimes it helps not to know that much, right? Like if you're going to go start something, you have to know enough to have a chance and not too much. Otherwise, We'll never do anything. And so we thought it was, you know, the right, it was sort of the right intersection of some big trends. And I don't think it was, I thought it was pretty obvious that companies were going to stay private longer, but I don't think that was obvious to people who weren't like on the ground and paying attention.

6:09Because, you know, when we went out and talked to institutional limited partners, like they were not necessarily of the mind that the industry was changing, that this was going to be a thing. And so at this point, we more or less won the argument, but that was not true 16 years ago.

6:23Justin Fishner-Wolfson:The stat was last year, 2025, over$240 billion was via secondaries. 31 % of venture volume was all secondaries. Yeah, and there's some constraints on the industry too because you have to be a registered investment advisor. There's a bunch of rules around this as well. I think from our view, it doesn't matter if it's primary or secondary. We're just focused on trying to be in companies that we're excited about, that we think can continue to grow for extended periods of time and that are defensible. and if you can keep building your positions in those companies, then everything works out. And whether or not it's a primary investment, a secondary investment, it honestly doesn't matter that much.

7:01Justin Fishner-Wolfson:So what was it about SpaceX then? Was it the team? Was it the launches? I mean, the team's great. I mean, the team has been together really for a long time. I think if you look at the leadership, I mean, Brett is probably the most recent addition. It's been 15 or 16 years or something that he's been at the company. So the team is absolutely fantastic. Glenn's been there for like 22 years. So like it's just, it's a good team. I mean, they also really built something that worked, right? They flipped the business model in the industry because historically it had been cost plus and they had transitioned to a firm fixed price model.

7:36And so a combination of a business model shift and then making, you know, the Falcon 9 partially usable fundamentally changed the economics of the business. And so they've just built things on top of that over the years, like Starlink, which has been amazing.

7:51Justin Fishner-Wolfson:I want to talk about that further. Like the economics of the business, it's so efficient. It was so efficient. I had Christian on last year, kind of like around this time. And it seems like it was like five years ago because the company was valued at$300 billion and hadn't raised as much capital as it has now. I think had raised$10 billion so far around that mark. who might have been like 12 or so. What did you see? I guess, could you walk through kind of like the economics and how they remained so economically fit? Well, I mean, they were profitable for a very long time. And the launch business was, I mean, they were doing things that no one in the industry had accomplished, right?

8:34They were launching not just cheaper, but way more frequently, right? They're going to launch, I don't know what to me this year, but like something close to 200 times. no one else in the world is launching even 15, 20 times. So what they've accomplished has really not only increased the access space because it's cheaper but because you can actually get there faster. And that's been true for a long time and launch was profitable for them and so they just never needed to raise that much money. And that's been great.

9:05Justin Fishner-Wolfson:And now they have Starlink, which we are loving on our airplanes. Oh, yeah. No, it's really kind of incredible that you can be on a United flight now and you actually can, I mean, you can make phone calls now. I think we're going to have to figure out what the etiquette's going to be on this stuff. But you can totally do Zoom calls if you want on any flights these days, assuming they have Starlink. Sorcery is brought to you by Brex, the financial stack trusted by more than 30 ,000 companies, including one in three venture-backed startups in the U.S. Nearly 40 % of startups bail because they run out of cash.

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10:22Justin Fishner-Wolfson:Start today at brex.com slash sorcery. That's B-R-E-X dot com slash sorcery. Turing is training the next generation of AI with tasks that require real expertise and real world judgment. That's why companies like NVIDIA, Anthropic, Salesforce, and Gemini partner with Turing. Turing builds realistic reinforcement learning environments and data systems based on real operational traces, the kind of infrastructure Frontier Labs need to train superintelligence. Visit Turing.com slash S-O-U-R-C-E-R-Y. When did you see Starlink as a really great push for the business? I think everybody knew that if you could build the constellation, then it was going to be a good business.

11:12The question was, could you build the constellation economically? And it was probably 2019 or so when they launched probably a couple of Starlink satellites. And it was pretty clear for people who had known them for a long time that they'd figured it out, so this was going to work. And therefore, you could sort of just start to model this very understandably. It's like, okay, cool, this is going to work. Who are all the people who don't currently have access to high-speed internet? In the U.S., it's like tens of millions of people. That's in the U.S. Forget globally. There are tens of millions of people who don't have – not that they can't afford it.

11:47They literally just can't buy it. And so there's some intersection between people who can't afford it and people who can't buy it. But there's also plenty of people who can afford it. And I think Starlink has been really transformational globally in terms of access to health care, access to education. It's not, I mean, I'm sure some people weren't using it to watch Netflix too, but like it's, you know, I think what COVID taught everyone was like the internet really was everything for people, right? It was jobs. It was, you know, it was healthcare. And so Starlink has really made it way more possible in places that were otherwise cut off.

12:19Justin Fishner-Wolfson:It's really still very underrated in commercial aviation and it probably should be on literally every airplane. We flew up this charter company craft we did an episode with them um and they were i talked to the pilot about it i was like well tell me about starlink they're like we love it like we have a backup we have it all over we're like totally fine with having the planes on the ground for like three weeks to get it on because one like clients really like it sure passengers but also for the pilots when they're crossing over into different countries you don't lose wi-fi you don't lose service you don't lose access to the weather, communications, all this kind of reporting that you normally do.

13:00Think about both. Same thing, right? I mean, just any place where you're going to be in the middle of nowhere, you now have internet. It's great.

13:07Justin Fishner-Wolfson:Tom Mueller, I asked him about this, like, did you, like, when did you know that it was going to be really big? He said, oh, we knew it, like, immediately, and we immediately wanted to get out as many as we could. And look, Tom's the guy you want to use if you're trying to get things to move in space, right? If you want to put up a constellation, Tom's a good guy to talk to. So as the firm started with SpaceX, how did you get kind of like the confidence to continue to build out those positions? I mean, it's like, are you going to retire now? Like, what are you going to do? No, I think we're going to keep building the firm.

13:43But I actually think our first investment was in Palantir. I might have to go check with that. But I actually think our first investment was actually in Palantir. Yeah, look, we've been building the firm for the last 16 years. I mean, you know other people here and I think we're really focused on continuing to do that. And this is, you know, we're in the middle. Like, this is part of the journey for SpaceX, for us, whatever. But like, as you mentioned at the beginning, like there are a lot of great companies that we're invested in that we're excited about, right? Impulse Space, Hadrian, right?

14:07Like there's a ton of good stuff going on.

14:09Justin Fishner-Wolfson:You backed a couple of SpaceX alumni. So how did the Impulse investment come to be? I mean, obviously, we've known them for a long time. And I think we got excited about what they were doing and kind of the unique capabilities that they had. And how that was specifically relevant for commercial, but also for government as well. And so it just seemed like a logical investment. So with these IPOs, do you think the secondary market is going to continue to get big? Yeah. I mean, the market has expanded by a couple orders of magnitude since when we started the business. I think as companies stay private, like all sorts of different people end up being in liquidity, right?

14:50It starts with the employees, but eventually you end up with the investors. And, you know, we're sort of, you know, at the point where like companies from a life cycle perspective are starting to go public again. SpaceX is the big one to kind of start this. But I mean, as you mentioned, like OpenAI and Anthropic are both valid. They're S1s confidentially. So it's going to be a pretty interesting few quarters in the public markets. There's a lot of capital that people are raising.

15:15Justin Fishner-Wolfson:Where do you think the market is shifting categorically? Yeah, I mean, I think a lot of people, they think about categories, we think about companies. And so if you looked at, just going back to the SpaceX example, it's like if you looked at SpaceX, you would think, oh, gosh, there are all these great space investments. There were not, right? We looked at probably every SpaceX or every space investment for 15, 20 years. And the good investment was SpaceX. And I think a lot of people thought, well, we should go invest in all these other things. And the answer is you should invest in SpaceX. Andrel might be maybe a little less extreme version of that.

15:47But it's just like there's a category. But really, there's a company that's incredibly successful and that you should continue to invest in that company. So it's less sectors and more companies. And will there be a company that ultimately ends up with a really large fraction of the market? And so that's kind of what we're focused on. And we're looking for the companies that are durable. right? Because what you don't want to do is have a thousand different companies that kind of all sound the same and they're all duking it out to end up with like a small piece of the market. Like that's not a great investment.

16:17So there's always some confusion between like what is a great company and what's a great sector. And all I really care about is like is it going to be a great company?

16:25Justin Fishner-Wolfson:With all these AI companies though like how are you discerning the hype from long-term durability? I think it's a hard question. I mean in all honesty like we haven't you know invested in any of the big foundational models. I think it was just always sort of hard for us to understand which one was going to be the best model at any given, or not really at any given point in time, in the long run. I think that's really the question. It's like, which one is going to be the one that is the best in 10 years? And I don't know how to answer that question. I mean, I think the technology is super valuable.

16:55It's clearly, I mean, it clearly is getting massive adoption. So it's not that it's not useful. It's just how do you know which one to pick? Right? That's the hard question. I mean, I think Cognition's in a really interesting spot right now because they're sort of the last independent, you know, company in the space. And I think there's a lot of value, right? Enterprise customers really don't want to get locked into, you know, a single foundational model in the same way that when you sort of thought about cloud, it was like people really, you know, they weren't sure if they want to put their data in the cloud.

17:23They really weren't sure, you know, whether or not they want to be locked into a single cloud provider. So people like multi-tenant and things like, you know. So I think Cognition kind of sits in a really important part of the market right now where if you're an enterprise customer, it's like these are the only guys who can give you access to all the underlying models without the lock-in that comes from that. So that's why, I mean, that's one of them. I mean, there's a lot of reasons to be excited about Cognition, but that's one of them.

17:47Justin Fishner-Wolfson:How is the firm structurally different from a traditional VC? We've been really flexible, and that's served us well, right? Whether or not it's a primary investment or secondary investment, that's sort of given us the ability to build positions over time. And so, like I mentioned, you could go back and look at how many investments we made at SpaceX, but that's not the only company that we've made a number of investments in. So whether or not it's Hadrian, we've probably written, I don't know, four, maybe five checks there at this point. We want to keep investing in the companies that we have conviction in and really get concentration in those businesses.

18:21and I think that's a little bit different than how the industry works right most people are trying to write like one large check at the beginning you hit a certain ownership percentage and then maybe they do their prorata or something but it they tend not to continue to follow on and concentrate over time we've learned a lot about how you might structure tenders and things like that which really makes people's lives easier right I don't think they won't be successful otherwise but it's like you can do it the easy way or the hard way and if you're really busy doing a lot of other things maybe you want to pick the easy way.

18:49And all of these things really kind of boil down to access to capital, right? Like you want the best companies to have good access to capital because that's going to give them the ability to work on the hard problems. And if you can solve those problems, then they turn out to be incredible businesses. A lot of this is just like incentive alignment and like expectations management, right? If you run a tender, it turns out your employers are going to assume that you're going to run another tender, right? And for the most part, People don't really like it when prices go down, right? And so you want to think about, like, how frequently are you going to do these things?