The Exchanges

Q And why did you go after the secondary angle? How did you have conviction in that early on?

A I think the insight that we had, if you kind of roll back the clock to like, 20 11, that was right before Facebook had gone public, and you know, our belief was companies were gonna 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 account to publicly report. So it was sort of all the negatives of being a public company with none of the positives. And 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. Um, and 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. Um, and 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 dea…

AI assessment note: “our view was very simply that companies were going to end up staying private longer”

Q things about SpaceX in this picture because they've run tenders every six months. They have a pool of employees that are not just software engineers, but people who are welding machines that are electricians. And these are traditional blue collar jobs that have not seen tech like equity exits. So I'm curious on SpaceX's standpoint because they also Buy back their shares. So like what, what are the dynamics internally?

A I think it's great that they've, I mean, they've really shared equity across the entire company, which is incredible. And to your point, they have lots of people on the shop floor who literally make all of the stuff that matters. So the fact that this is life changing for so many people, I really think is incredible. Um, you know, the tenders are an opportunity, like no one has to sell anything, right? It's just an opportunity for people to sell something. Um, The company has bought back shares, I think, just to manage dilution, right? If you look at public companies, they buy back shares, and that's, you know, relatively normal. So the only difference is that this was a private company.

AI assessment note: “The company has bought back shares, I think, just to manage dilution”

Q Have you experienced any of the launches with any of the SpaceX team?

A Oh yeah, I mean, my friend was one of the engineers at SpaceX, right? I mean, I, Like, you know, there were some of the, you know, the old launches, like I remember going down to Hawthorne for like the third Falcon one launch. That was like the first launch after, um, we made the investment at founders fund. And so actually that flight, I remember flying down there cause you never quite know when the launch is going to happen. And like the flight was like slightly delayed and whatever. And I'm literally like running into the building literally as there, there's like, Like, they, I think they said one, and then like the rocket took off. Like, they were like, they were like 10 minutes delayed, which was perfect, um, and I caught the launch, and you know, that was the one where the second stage had hit the first stage, and so, you know, it wasn't fully successful, and I remember, I think I was standing next to Gwen or something, and she, you know, I was like, oh, you know, what, so how are you guys gonna fix this? And she was just like, I think we just need to add a delay between, between the, you know, on the stage separation, um, and like Steve Davis, I think, said it was like seven and a half seconds or whatever, um, And, and so, like, that was it, right? Like, that was the only change they had to make, like, and then on the fourth launch, everything worked, worked perfectly. S…

AI assessment note: “I remember going down to Hawthorne for like the third Falcon one launch.”

Q 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.

A 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 you'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. Cause 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've more or less won the argument, but that was not true 16 years ago.

AI assessment note: “I thought it was pretty obvious that companies were going to stay private longer”

Q day and even same hour liquidity, access your funds anytime. Companies like Scale AI, DoorDash, Service Titan, HIMS, Anthropic, Flexport, Robinhood, and Plaid trust and use Brex. 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. When did you see Starlink as a really great push for the business?

A I think everybody knew that if you could build the constellation, then it was going to be a good business. The question was, like, could you build the constellation economically? And it was probably 2019 or so when, you know, they launched probably a couple of Starlink satellites, and it was, I think, pretty clear for people who had known them for a long time that, like, they'd figured it out so this was gonna work, and therefore you could sort of just start to model this, like, very understandably. It's like, okay, cool, this is going to work, like, Who are all the people who don't currently have access to high-speed internet, right? I mean, in the US, it's like tens of millions of people, and like, that's in the US, like, forget globally, right? Like, there, there are tens of millions of people who don't have, not that they can't afford it, they 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, like, access to healthcare, access to education, right? It's not, I mean, I'm sure some people are using it to watch Netflix too, but like, it's, it, it, you know, I think what COVID taught everyone was like, the internet really was everything for people, right? It was jobs, it was, y…

AI assessment note: “it was probably 2019 or so when, you know, they launched probably a couple”

Q Where do you think the market is shifting categorically?

A 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, I don't know, 1520 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. Um, you know, Android might be like, uh, maybe a little less extreme version of that, but it's just like, there's a category, but really there's a company that's, that's incredibly successful, and that you should continue to invest in that company. Um, so it's less sectors and more companies, and Will there be a company that ultimately, you know, 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, that's not a great investment. Um, so there's always some confusion between, like, what is a great company and what's a great sector?…

AI assessment note: “a lot of people, they think about categories, we think about companies”