Invest Like The Best
Episode 227 Secondary Investing in Private Markets
Invest Like The Best

Episode 227: Secondary Investing in Private Markets

Invest Like The Best

Episode 227

Secondary Investing in Private Markets

Justin Fishner-Wolfson is the founder of 137 Ventures. We cover what early career experiences led Justin to start 137 Ventures, the counter-intuitive information asymmetry between public and private markets, and the interesting trend of digitization in the physical world.

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[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

Secondary Investing in Private Markets

Introduction

Patrick
My guest today Justin Fishner-Wolfson, founder of 137 Ventures, a venture capital fund focused on providing liquidity solutions to founders, investors, and employees of private businesses. In our conversation, we discuss what early career experiences led Justin to start 137 Ventures, the counterintuitive information asymmetry between public and private markets, and the interesting trend of digitization in the physical world. I hope you enjoy this great conversation with Justin.

137 Ventures

So Justin, I think the best place to begin for those unfamiliar with 137 Ventures is to hear the thumbnail sketch of the founding story. Why did you start the business? What's unique about it in terms of how it's trying to earn great returns for its investors?

Justin
What really happened was I was at Founders Fund in the early days. And I had a lot of friends from college who ended up at Facebook. If you kind of roll the clock back to 2010, there was that Goldman Sachs rounded value of the company at 50 billion. And I have a lot of friends who had all this wealth on paper. They owned all this stock and literally no money. And they didn't want to live with roommates anymore because they were probably getting married, and maybe they were going to have a kid. And at some point, if you're going to have roommates, you want it to be people that you're related to as opposed to others.

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