Founders Fund's $600 Million Bet on SpaceX: A $50 Billion Return

Original Author: Bao Yilong

Original Source: Wall Street News

Brian Singerman, former partner of Founders Fund and a major investor in super unicorns like SpaceX and Palantir, recently revealed his "contrarian" concentrated betting strategy in an interview, bluntly stating that it's "A+ founders" like Elon Musk who create the return myths of venture capital history.

Wall Street News noted that SpaceX is set to officially list on the US stock market this Friday. Over the past nearly 20 years, Founders Fund, led by Peter Thiel, has invested approximately $600 million in SpaceX through multiple funding rounds, currently holding about 3% of the company's shares.

If SpaceX ultimately goes public at a price of $135 per share, its valuation will approach $1.8 trillion. Founders Fund's equity stake would then be worth over $50 billion, yielding a return of nearly 100 times, arguably one of the most successful bets in venture capital history.

Against this backdrop, on the June 11 podcast of "Sorcery," former Founders Fund partner Brian Singerman received an in-depth interview from host Molly O'Shea in his private home music recording studio.

Left: Brian Singerman; Right: Molly O'Shea

In the interview, Singerman unreservedly shared the thought process behind the bet on SpaceX, his evaluation of Musk, and Founders Fund's highly disruptive investment philosophy. Singerman stated:

"For me, the essence of venture capital is: putting as much money as possible into the best companies at the best price. Over 98% of my decisions are based on the strength of the founder."

Singerman emphasized that when he had the opportunity to meet Musk and learn more about SpaceX, he clearly realized that there was no one else on the planet besides Musk who could truly make an undertaking like SpaceX successful.

Furthermore, regarding venture capital returns, he bluntly stated that funds achieving only 3x returns over 10 to 12 years actually underperform S&P 500 index funds, meaning investors have "effectively lost money."

In his view, portfolio management, reserve allocation, and ownership percentage calculations are all "nonsense." He admitted that if SpaceX hadn't succeeded back then, Founders Fund would no longer exist – "We were literally betting our careers."

"Without SpaceX, Founders Fund Would Not Exist"

Looking back at the rise of Founders Fund, SpaceX is absolutely the core anchor point that cannot be ignored.

Singerman did not shy away from this investment's decisive role in the fate of the entire institution. Singerman stated:

Without SpaceX, Founders Fund would cease to exist. We basically bet our careers on SpaceX.

Although SpaceX experienced three rocket launch failures early on, the team maintained extremely high conviction.

When asked why he dared to make such a heavy bet, Singerman attributed the core reason entirely to his judgment of Musk himself.

When I met Musk and learned more about SpaceX, I clearly realized that there is no second person on Earth like him who could truly make something like SpaceX happen. Throughout business history, there has never been anyone like him.

In Singerman's view, Musk's irreplaceability lies in his ability to simultaneously excel in the dual roles of CEO and CTO. He said:

Very few people can be world-class simultaneously in understanding the execution and technology layers of a novel business model. He is that kind of person.

Additionally, regarding the highly anticipated Starlink business in the market, Singerman revealed that the investment team had foreseen its immense commercial potential early on:

The launch business is an indispensable foundation, but we all knew long ago that Starlink is the true core business model.

Abandoning Venture Capital Dogma: "Put the Most Money into the Best Companies"

Unlike Wall Street and traditional Silicon Valley venture capital firms that emphasize "portfolio management" and "risk diversification," Singerman exhibited an extremely pure and concentrated investment philosophy.

Singerman stated bluntly:

For me, venture capital is about putting the most money into the best companies at the best possible price.

Singerman further emphasized:

There is no room in my decision-making for this nonsense about portfolio management, reserve calculations, and ownership percentages. It's that simple: put the most money into the best company.

From a market return perspective, he pointed out sharply that even if most diversified early-stage venture capital funds achieve a 3x return over a 10 to 12 year cycle, they practically can't outperform the S&P 500 index fund. Singerman said:

Beating the market is very difficult. The way to beat the market in venture capital is to pour massive amounts of capital into the companies you are convinced will become the greatest in history, putting every dollar you can mobilize into them. Every other method will either just match the market or underperform.

Under this strategy, the "founder" becomes the only variable. Singerman explained:

When I make venture capital decisions, over 98% of my basis is the strength of the founder. When I talk to that founder, do I believe they will crush every obstacle? Do I believe they are the best in the world in some novel domain?

Singerman also acknowledged the boundaries of his judgment. He never reads financial reports. The only time he was asked to create a spreadsheet, his wife helped him complete it.

Regarding investments in biotech companies like Stem Centrx, he admitted "I know nothing about biotech," but still decisively invested because he believed the CEO was unparalleled.

Inside Look at Peter Thiel: Building an Anti-Sycophant Culture and Macro Foresight

As the soul of Founders Fund, Peter Thiel's style and macro judgments have always been hot topics in the market.

Singerman evaluated Peter Thiel's team-building strategy in the interview. Singerman emphasized:

Peter Thiel is the greatest venture capitalist in history. The best thing he does in venture capital is surround himself with people who are genuinely smart and unafraid to show their individual brilliance.

At Founders Fund, no one tries to guess and say what Peter Thiel wants to hear, Singerman elaborated:

If you just want to say what he wants to hear, it will never work. People are too smart; they see through it immediately. He built a team of 'non-sycophants' who dare to oppose him, as long as your point is good enough.

He emphasized that Founders Fund's success is precisely because team members have genuine expertise in different areas, respect each other, and do not simply replicate one another.

He internalized this principle as a personal code of conduct: focus on what you are truly good at, do not pretend to be an expert in other fields, and do not participate in topics you don't understand.

He believed that no matter the perspective of the team members at the time, they could ultimately reach a consensus on the judgment that "this is a real A+ founder" – not an A-minus, but a genuine A-plus. "There are very few such people."

Beyond corporate culture, Singerman also mentioned Thiel's keen sense for macroeconomic trends.

Regarding Peter Thiel's recent move to Argentina, Singerman admitted:

On macro trends, Peter Thiel is usually very accurate. He is the best person I have ever seen at judging global macro trends. He believes American politics is moving in a more extreme direction.

Singerman himself has been influenced by this concept of asset security. He chose to move to Hawaii, not just for the climate, but also for deeper reasons concerning the protection of private assets:

I am not mainly trying to escape high income tax rates; I am trying to avoid asset confiscation.

Bullish on Human Cultural Heritage, Physical Collecting is a Belief

At the end of the in-depth interview, the investor who discovered countless tech unicorns shared his views on the AI era.

Surprisingly, as a cutting-edge tech investor, after stepping back from frontline VC, he devoted significant enthusiasm to physical games, music, and cultural collections. Singerman stated:

I am very bullish on unique, iconic artifacts of human culture. In a world increasingly dominated by machines and AI, things that truly bear the imprint of human emotion and creativity will grow exponentially in mind share and value.

Singerman concluded:

"I am a tech optimist. I have made a lot of money by betting on humanity, by betting that the 'apocalypse won't come.' Machines might be able to make music better than me, but so what? Only the emotional feedback humans get from art and passion is irreplaceable. That is what will truly define us in the future."

The full interview text follows (AI-assisted translation):

Molly O'Shea: Brian Singerman, welcome to Sorcery.

Brian Singerman: Thanks for having me.

Molly O'Shea: Thank you for hosting us. This place is really off the beaten path.

Brian Singerman: Yeah, we're in my home recording studio right now.

Molly O'Shea: It's a bit of a "name is destiny" thing – Singerman.

Brian Singerman: I don't think so. That last name was probably made up a few generations ago at Ellis Island.

Molly O'Shea: Then how do you explain everything about you and music?

Brian Singerman: Right, exactly. There seems to be no other explanation for the music thing besides having a musical-sounding name.

Molly O'Shea: It must be where it comes from. So when did music start?

Brian Singerman: Basically, I was "created" at Ellis Island.

Molly O'Shea: Okay. We've gotten off to a good start. Most people know you from Founders Fund, where you are quite legendary. Grace from Vanderbilt invited me to one of their conferences, it was probably fall/winter, and she said, "Hey, would love to have you, you can interview Brian Singerman on stage, are you interested?" I said absolutely. Then it turned out I had to be abroad at that time.

Brian Singerman: You're quite a world-traveling woman.

Molly O'Shea: So sorry about that. But we finally meet today at your music factory.

Brian Singerman: It's a recording studio, but sure.

Molly O'Shea: Okay. I want to talk about all of this. I mean, it's truly an unprecedented crazy time right now, and most of the companies in the headlines are ones you invested in early. I want to go through SpaceX, Palantir, Anduril, one by one. But before that, Max Loewen gave me some great questions.

Brian Singerman: Oh no... I really don't want to hear what Max is going to bring up. I'm not ready for it, but I'll do my best. I will definitely find a way to get back at him.

Molly O'Shea: We'll dive deep into investments later. Stay tuned. Let's start here – are you ready?

Brian Singerman: Ready.

Molly O'Shea: When and how did you get into board games?

Brian Singerman: That's a good question. I've been playing board games for a long time. I'm just a gamer. It's my label, it's core to my investment strategy and everything else. I love strategy games, it's my true hobby. I started playing games when I was maybe six or seven, not just video games but also board games. I'd go to small gatherings near my house where people played all sorts of things – from Monopoly to Acquire, and other old games. I got deeply hooked.

Molly O'Shea: Which ones are your favorites?

Brian Singerman: I've reached national competitive, even global competitive levels on several games. I don't know if I should say "love" or "obsession," but I tend to get addicted to one specific game at a time. I was the US champion of Settlers of Catan, but that was back in '95, '96, when almost no one played it, it was its first year. I'm probably top ten in the world in Ascension, and I was definitely top ten in Terraforming Mars and Keyflower. Yet I'm so bad at poker.

Molly O'Shea: Poker? You're bad at poker? How did you get into each of these games? How did it start?

Brian Singerman: I can't really explain. You play one, it seems interesting, and you go deep. Especially when these games get online or computer versions, you can practice repeatedly and really get good. Back in 1995, it was almost impossible to get to a very high level in any particular game. It's nothing like today, I definitely couldn't compete with the top players now. But once online gaming really took off, as long as you put in enough time, you could get good. My wife is quite exasperated by this – to reach that competitive level in these games, you need to play 10 hours a day, almost around the clock.

Molly O'Shea: And you already had a family by then.

Brian Singerman: Yeah, so after having a family, I couldn't do that anymore. But before that, it was really fun.

Molly O'Shea: Have you ever gotten into chess or Go?

Brian Singerman: I'm bad at chess. I'm bad at any game where tactics and strategy are equally important, or where tactics are more important. I don't like tactics, I like strategy.

Molly O'Shea: I'd also like to delve into this strategy part, because I believe it does permeate your investment philosophy and how you view companies. What strategy do you primarily pursue? How do you view the competitive landscape, how do you think about the game?

Brian Singerman: I don't think about the game. When I do venture capital, over 98% of my decisions are based on judging the strength of the founder. When I'm talking to that founder, do I believe they will be unstoppable in what they do? Do I believe they are the world's top talent in some brand new field? Even now, though I'm not directly investing, I still ask the same questions: Do I think they are the world's best at something? Do I think they can use that to build one of the world's greatest companies? Let's get back on track.

Molly O'Shea: Okay, back to 2007. You were talking to Sean Parker, and he introduced you to Founders Fund. You were managing your own angel fund at the time. Was SpaceX what made you interested in joining Founders Fund? What was that feeling like?

Brian Singerman: It's really amazing looking back. At that time, I was managing my own fund while still at Google. I was planning to leave Google and raise a larger fund myself. Then I became friends with Sean, and he said, "Hey, come see what we're doing at Founders Fund." So I went, just to look around, met a few people. I didn't know who the others were, didn't know who Peter was, just wandered around. They were just starting to consider a company called SpaceX – which sounded utterly absurd. But that thing was so cool that I realized there was no way I could do something on that scale just through angel investing. So I thought, this is what I want to focus on. So I joined Founders Fund early on.

Molly O'Shea: How did you meet Sean?

Brian Singerman: I think I was advising some company he was involved with, and then I met him. I think I met Joe Green first – he was Sean's co-founder at Causes – and then through Joe, I met Sean. That's how Silicon Valley works; the network is so intertwined it's hard to say exactly how the connection happened, but we just became friends.

Molly O'Shea: That's a good segue, because Max had another question – and I don't know if there's a story behind this question, but if there is, I want to hear it all. He asked: Silicon Valley is a place where characters gather. Who do you find the most interesting, whether in your portfolio or not?

Brian Singerman: Silicon Valley is indeed a place where characters gather. I don't know who is "the most interesting." I can say this: there are two types of people in Silicon Valley – those who follow the crowd, and those who are truly unique, truly world-class in some specific domain. I particularly appreciate the latter, those who excel in an area I could never master. I think Peter Thiel is the greatest venture capitalist in history, and there's a reason for that. And one of the reasons Founders Fund initially attracted me was that everyone there seemed to be world-class in their respective fields. When I had the chance to meet Elon and learn more about SpaceX, it was very clear that no one else on this planet could truly make something like SpaceX happen.

I don't want to rank who's most interesting, but we can talk about the people I know well one by one, and I can analyze what each of them is world-class at. Whenever I meet someone I believe is truly the best in their domain, I get very excited.

Molly O'Shea: I'd love to do that. I have a common question about people's personal performance and their circles. I believe you are an extension of the people closest to you. Through Founders Fund and the people around you, what did you learn from Peter Thiel?