Brian Singerman: How I Became a Partner at Founders Fund, Why We Put $400M into Anduril | 20VC #943

Career Trajectory & Origins:

• Brian began at Founders Fund 15 years ago after transitioning from an engineering manager role at Google, where he invested in early Y Combinator companies starting in 2006.
• He joined Founders Fund full-time in 2007 following a connection with Sean Parker, specifically catalyzed by the firm's consideration of an investment in SpaceX.
• His investment philosophy focuses on "upside maximization," prioritizing the selection of the best companies over macroeconomic timing, as venture cycles span a decade and ignore macro fluctuations is impossible but predicting them is futile.

Current Market Conditions & Investing Mechanics (as of Oct 2022):

• Brian identifies a significant price mismatch between private company valuations (lagging behind public market corrections) and current macro conditions, making investment difficult.
• He notes that while some companies are going out of business or raising bridge rounds, the "best" companies are opting to "ride it out" rather than raise at inflated prices.
• Founders Fund is currently waiting for prices to catch up to macro reality; they are not under pressure to deploy capital even if it means missing deals at "end of 2021" valuations where competitors have cut their valuations by 80%.
• The firm has only deployed one major check in 2022: a $200 million investment in Anduril.
• Brian advises founders to raise capital at reasonable prices that do not kill the company, acknowledging that some companies will shut down due to the cycle and that he does not predict market cycles.

Strategic Lessons & Reflections on 2021-2022:

• Brian admits the firm moved too fast in 2021 and should have been more strategic about taking cash off the table (realized gains) rather than holding IPO shares.
• He acknowledges a lesson in not focusing too heavily on what the "next round" investor wanted, as those expectations shifted drastically.
• Despite these reflections, his core thesis remains unchanged: invest in the best founders in the best markets at the best prices, refusing to alter strategy for macro reasons alone.
• He observes a "price inversion" at the early stage where capital is migrating down from later stages, keeping prices high for "best pedigree" founders while later-stage companies face down rounds.

Investment Style & Fund Sizing:

• Brian prefers writing massive checks (e.g., $200M–$500M) into a few top-tier companies rather than spreading capital across many deals.
• He advises new fund managers to raise the smallest fund size possible that allows them to write checks comprising 25–30% of the fund, as returns are easier to achieve on smaller funds.
• For his own firm, comfortable writing $500M checks necessitates a ~$2.5B fund size to maintain portfolio impact.
• He rejects the concept of "loss ratios" mattering for upside maximization; he argues that for a massive fund, a $10M loss is functionally the same as a $30M loss, so the goal is purely finding the highest upside, not protecting against downside.
• He has no fear of making large bets, provided the company has a "moat" and is run by a world-class team, stating he is "pretty sure" the $200M check in Anduril will return $2B.

Hiring, Team Dynamics, & Firm Culture:

• Founders Fund prioritizes hiring partners with unique, differentiated "moats" or angles (e.g., Sam Long's specific expertise in high-growth enterprise sales) rather than cloning existing partners.
• The firm avoids "dogma," adapting strategies quickly when market conditions change, which Brian cites as a key reason for their long-term success.
• Internal strategy involves partners running independent strategies (e.g., starting companies themselves to keep networks fresh) rather than following a rigid, top-down firm-wide process.
• The firm is open to "cross-fund investing," allowing LPs to see the same company (like SpaceX or Anduril) across multiple funds, relying on historical success to maintain LP trust.

Board Service & Founder Interaction:

• Brian expresses a strong dislike for traditional corporate governance board roles, citing a lack of skill in financials and governance.
• He prefers "strategy dinners" with founders, focusing on leveraging unique moats and high-level strategy rather than operational oversight.
• He believes the best board members are those who act as "door openers" and sector connectors, distinct from the strategic partners who drive company vision.

Key Investment Case: Anduril:

• The $200M+ investment in Anduril was driven by a unique convergence of factors: a team with deep government relations and execution, combined with Palmer Luckey's product brilliance.
• Brian views the defense-tech sector as having a massive, unmet moat, noting that traditional players like Lockheed and Boeing rely on cost-plus models with little innovation.
• He notes that Anduril assembled a team willing to work in a sector (defense) that Silicon Valley generally avoids, giving them a first-mover advantage in a space ripe for disruption.

Personal Philosophy & Future Outlook:

• Brian admits his biggest weakness is not delegating skill improvements; he refuses to "put skill points" into areas he is weak at (like public market analysis or corporate governance), preferring to hire for those gaps.
• He observes that fatherhood has reduced his capacity for late-night strategy dinners, requiring a shift in how he manages his time and energy.
• He maintains a "lone wolf" mindset regarding personal fame, prioritizing returns for LPs while minimizing public celebrity.
• His investment decisions rely heavily on "gut" and informal due diligence (back-channeling) rather than perfect information, accepting that errors are inevitable in a high-upside business.