Brian Singerman: "If SpaceX Didn't Work, Founders Fund Wouldn't Exist"

Founders Fund veteran says venture returns come from judging people

Brian Singerman built his venture career on judging people rather than spreadsheets. At Founders Fund he backed founders he saw as the best in the world at something new, and he now applies a similar test to fund managers. He argues venture only beats an index fund when an investor has that kind of edge.

Takeaways

• Founder quality decided almost every investment. For most of his venture career, Singerman says over 98% of a decision came down to whether the founder could be best in the world at something novel. He preferred coming in later, after seeing execution, which he says he cannot judge himself.
• SpaceX was a bet with the firm's careers. Founders Fund invested in 2008 after three failed rocket launches, because Singerman says nobody else on the planet could pull it off the way Elon Musk could. He went to Hawthorne for the first successful Falcon launch.
• Thiel built a firm that let partners differ. Singerman calls Peter Thiel the greatest venture capitalist in history and the best at macro thinking. Thiel hired people who could push back and let each partner play to their strengths. Singerman admits he never read a financial report.
• Venture must beat an index fund to matter. Singerman defines venture as putting the most money into the best companies at the best price. A fund returning about three times over ten to twelve years probably loses to a Vanguard no-load index fund, so an edge such as private-company access is required.
• He sizes up fund managers within five minutes. As an investor in GPs, he asks whether the manager could have beaten him in his prime playing their game. He values genuine, authentic people and praises Cyan Banister, and notes some managers may posture for LPs.
• Human art keeps value against machines. Singerman loves N-of-one artifacts such as a Jerry Garcia guitar. His new home studio will host artists for free while he owns no IP. He argues machines cannot replace the emotional value of human art and calls himself a tech optimist.

Bets Singerman discusses

• Palantir took $75m of a $240m fund at a billion-dollar valuation, according to Molly. Singerman accepts that as roughly right and calls it bold.
• Oculus. He tried the product, was blown away and became its first investor. He calls Palmer Luckey one of the most honest people he knows.
• Anduril. He credits its cohesive founding team as better than any single founder.
• StemCentrix was among the first bigger exits. He says he knows nothing about biotech and bet on the team.