Secondary Investing in Private Markets

This episode is brought to you by:

Canalyst. Canalyst is the leading destination for public company data and analysis. If you've been scrambling to keep up with the deluge of IPOs and SPACs these days, Canalyst has models on Coinbase, Roblox, Qualtrics, and everything in between. Learn more and try Canalyst for yourself at canalyst.com/patrick.

Tegus. Tegus has built the most extensive primary information platform available for investors. With Tegus, you can learn everything you’d want to know about a company in an on-demand digital platform. Investors share their expert calls, allowing others to instantly access more than 10,000 calls on Affirm, Teladoc, Roblox, or almost any company of interest. All you have to do is log in. Visit tegus.co/patrick to learn more.

[00:03:47] - [First question] - Why he started 137 Ventures and what’s unique about it

[00:05:31] - Overview of secondary equity markets in the tech sector

[00:07:06] - Step by step process of how a secondary market investment works

[00:09:37] - Scale of secondary transactions in markets today

[00:10:19] - Valuations of secondary transaction rounds versus primary ones

[00:11:37] - Defining great in private market investments and the competitive landscape

[00:13:13] - Why there seems to be more information available in private markets

[00:16:23] - How better capital allocation may result from less asymmetry

[00:19:14] - What excites him about companies when meeting them for the first time

[00:20:34] - Example of applying his philosophy of investing in a defensible business

[00:22:20] - Counter positioning and inversion models to gain an advantage

[00:24:17] - Lessons learned from Palantir about unlikely competitive advantage 

[00:25:57] - Building good businesses when selling them to the government

[00:26:59] - What technology means in the current era

[00:28:34] - Methods for evaluating potential sources of defensibility and a lack thereof

[00:30:30] - Considering focus and expansion when scaling

[00:32:52] - Shared qualities of entrepreneurs who build these types of businesses

[00:33:50] - The business that taught him the most

[00:35:01] - Defensibilities that might appear beyond the seven powers framework

[00:36:21] - Thoughts on what seems to be craziest in the world today

[00:37:15] - What’s surprising on the low end of the valuation side

[00:38:11] - Interesting business models and ones he’s averse to 

[00:40:31] - Constructing a portfolio with companies that have a customer focus

[00:41:21] - Additional companies in their portfolio that aren’t of a similar model 

[00:42:08] - Lessons learned from SpaceX’s growth

[00:44:46] - Watching a SpaceX launch in person

[00:46:03] - Advice for entrepreneurs when seeking capital and capital partners

[00:48:04] - Investors he finds most impressive that he knows well

[00:49:26] - Defining the cost of capital and what it means to him as a venture investor

[00:50:56] - Is giving entrepreneurs too much money dangerous?

[00:54:14] - What great capital allocation looks like to him

[00:55:29] - Accelerating learning curves with tighter feedback loops

[00:55:57] - Useful metrics for customer acquisition and retention

[00:57:06] - Whether or not investing firms can and should behave defensibly

[00:59:13] - What is going in the world that has his attention lately

[01:02:06] - Key factors that have allowed him and his firm to succeed

[01:03:47] - What he thinks about when his mind isn’t focused on investing

[01:04:08] - The kindest thing anyone has ever done for him