Mar 21, 2025, 6:30 AM ETInterview

SpaceX, Stripe, Ramp, Anduril: Navigating Liquidity in Private Markets

Companies are staying private significantly longer, with the average duration shifting from 3–4 years in the 2000s to over 12 years today.
This trend is driven by the migration of the small-cap premium to private markets, reducing the need for public market capitalization.
Structural changes, including the JOBS Act raising the shareholder limit from 500 to 2,000 and the adoption of double-trigger RSUs, have removed regulatory forcing functions to go public.
Secondary markets and tender offers have emerged as primary tools for companies to provide liquidity and maintain morale without raising fresh capital.
Companies like SpaceX, Figma, Plaid, Databricks, and Stripe are utilizing tenders to manage liquidity and compensate for high valuations set during the 2021 cycle.

137 Ventures was founded in 2010 by partners with backgrounds at Founders Fund to capitalize on the thesis that companies would stay private longer to compound value.
SpaceX is currently the largest private company globally, valued between $300 billion and $350 billion, having raised only $10 billion in its 23-year lifecycle due to consistent cash flow positivity.
SpaceX runs tender offers every six months to manage liquidity for employees holding single-trigger RSUs, which are taxed upon vesting.
Unlike double-trigger RSUs used by companies like Stripe and Databricks to delay tax events, SpaceX's single-trigger structure necessitates regular liquidity events to cover annual tax bills.
The firm focuses on "generational businesses" with sustainable competitive advantages (moats) that can compound value over decades without public market scrutiny.

Remaining private allows companies to access a longer-term shareholder base, avoiding quarterly earnings pressure and enabling decade-long R&D horizons (e.g., SpaceX's Starlink and Starship).
Private markets offer greater M&A flexibility, as companies are not subject to public market scrutiny regarding acquisition decisions.
High-growth companies often choose to stay private to avoid repricing below 2021 valuations, preferring to compound earnings until they can re-rate significantly higher upon going public.
Private status provides the operational freedom to pursue "larger outcomes" and make capital allocation decisions that may be too long-term for public investors.

Christian Garrett identifies "defense tech" as currently overrated regarding the number of potential winners, arguing that value will accrue to a small handful of dominant firms rather than hundreds.
The defense sector mirrors the aerospace industry, where massive Total Addressable Market (TAM) growth concentrates value in one or two primary winners (e.g., SpaceX in space, Anduril in defense).
There is a noted underappreciation of "generational talent" within defense and hard tech, specifically operators who have scaled companies from early startups to hundreds of billions in value (e.g., Gwynne Shotwell of SpaceX, Shyam Sankar of Palantir, Matt Grimm of Anduril).
Southern California has solidified its role as the epicenter for aerospace and defense due to the concentration of manufacturing talent and legacy players like Boeing and Raytheon.

The collaboration between the tech sector and Washington D.C. has accelerated, driven by geopolitical necessity and the "Second Cold War" dynamic.
The "Hill and Valley Forum," co-founded by Garrett, Jacob Helberg, and Delian, serves as a bipartisan gathering to bridge the gap between tech leaders and policymakers, now drawing more elected officials than Davos.
Government initiatives like the DoD's "Replicator" initiative (faster procurement of autonomous systems) and expansions to FedRAMP represent a structural shift toward modernizing defense procurement through private tech.
Historical policy decisions, such as the JOBS Act, the Dodd-Frank Durbin Amendment (enabling FinTech), and Title 10 funding rules, have been critical catalysts for specific industry sectors.

Return to Office (RTO): Garrett argues RTO has become a "scapegoat" for failing businesses; he believes the reality is a universal shift to hybrid models, with no single "flavor" fitting all companies.
San Francisco: He rejects the binary narrative of SF being "dead" or "back," asserting it remains the primary AI hub but is no longer the sole center of gravity, with significant growth in LA, NY, Miami, and Austin.
Europe: Garrett is bullish on Europe, noting that immature capital markets create a "winner-take-all" dynamic where successful companies become massive compounders without domestic copycats.
Investment Philosophy: He advocates for the "power law" applicability across all asset classes, emphasizing that markets over-extrapolate good and bad; the optimal strategy is to identify market dislocations and concentrate capital in a few high-conviction opportunities.

Garrett credits his rapid rise to 137 Ventures' culture of extreme autonomy and the mentorship of Trey Stephens, who provided a counterbalance of skepticism to Garrett's natural optimism.
He plans to publish research on the disproportionate impact of government policy on the tech ecosystem and the economic divergence between the "1% economy" and the "99% economy."
The "Hill and Valley Forum" is set to continue its momentum in April, focusing on deepening the bridge between the tech industry and government policy-making.
Future investment strategy at 137 Ventures involves seeking information asymmetries and competitive advantages across different stages to build concentrated positions in generational businesses.