Altimeter 如何投出1亿美元以上的大额支票｜Anduril、SpaceX、K2 Space

How are you guys thinking about the exit environment and navigating this very volatile year?

Extreme volatility and uncertainty: max tech uncertainty, max political uncertainty, max economic uncertainty. It's not the most appealing environment to go public in. You still can do it. There's always going to be appetite from investors to invest in great businesses.

Erik Kriessmann, welcome to Sorcery.

Happy to be here.

I'm so pumped. You are kind of a legend. You are a legend. You fly a little bit under the radar, but you have a wonderful track record already. You've been at Altimeter almost 3 years now. They have over $10 billion in AUM, and you've invested in some of the most consequential founders of this generation: companies like SpaceX, Anduril, K2 Space, and some more. I'd love to just start with: what's your biggest bet right now?

Thank you so much. Happy to be here. Far from a legend. I try to fly a bit under the radar and just be a great partner to the entrepreneurs I'm working with. My biggest bet right now, in terms of position size, is Anduril.

Wow. Okay, so we need to get to how we got here.

Yeah.

1. From Talent to Venture

So you've been in human capital most of your career. You worked at Index, you worked at Khosla. How did you flip over to the capital side of things?

I've been in venture capital for over 10 years. I started at Khosla Ventures—I got recruited there—and worked really closely with Keith and Vinod. Dylan was there at the time, and I was kind of co-leading human capital, or talent. I was working with companies like Fare and Max Rhodes over there, right after we led the seed round, and companies like GitLab.

I remember I was talking with Vinod, and I was like, “Vinod, how are you going to measure if I'm good at my job, if I'm being successful, if this is valuable?” And he was like, “Oh, Erik, easy. I'm just going to ask the entrepreneurs that we've asked you to spend time with, ‘Hey, what do you think of Erik?’ And if they tell me, ‘Hey, he's great, thank you so much,’ I know you're doing your job. I trust that what you're doing is beneficial and making an impact on the companies.”

I was doing that at Khosla, and I got recruited to Index to lead all of human capital. I really had a blank slate to do it there, and that was a playground for me.

Mm-hmm.

I got to design something from scratch. The way we thought about it there was: you've got entrepreneurs, current founders, future founders, LPs, and talent in the ecosystem. What's the relationship we want to have with all these people? They're different relationship journeys, almost like you'd think of a customer journey.

A Series A company wants to have the CMO of a public company as an angel investor and an adviser before they can hire them. If you're a late-stage company, before you go public, you're thinking about bringing on an audit chair or a CFO to take you public, or a new president. Those same people want to angel invest in and advise early-stage companies.

We started seeing all this cross-pollination opportunity within our portfolio, and we thought about: how do we earn the right to have relationships with these people? What do they want? What's important to them? What do they care about at this stage of their life and career? How can we be the conduit to that thing for them?

That allowed us to build really deep, intimate relationships with these people. In parallel to that, we were working with our largest positions in our portfolio, spending time with Alex Wang, Dylan Field, or Asaf from Wiz and Figma and Scale AI. We would sit down with them and understand, “Okay, what's the number one thing any investor could do for you this year that would be transformational for your business? I'm not an employee, but what's the one thing that I can do for you that would fundamentally move the needle for your company?”

There are usually 1 or 2 or maybe 3 things over the course of an entire year. Almost all of them come back to something people-related. It's a key hire, a key introduction, a strategic introduction, something like that.

Mm-hmm.

You spend time with them to identify that thing, and then you just deliver. You do the thing. You build trust with the founders, and you deepen your relationships with the people you're working with to accomplish that. You earn the right to be that consigliere, or trusted partner, to the founder.

We found that through doing that. I was working with Alex Wang at Scale AI on the CTO search. We ended up hiring Brad Porter, who's since left and started Collaborative Robotics. We started seeing that these talent activities were leading us to other exceptional people who were starting companies.

We initially got to know Zach Abrams and Sean from Bridge when they were starting to think about what was next, before they'd even decided they were going to start a company. We quickly realized, “Oh, they want to start a company.” That led us to source and co-lead the seed round for Bridge, which was eventually acquired by Stripe after I'd left.

There were all these flywheels in the function. Ultimately, this is how it led me to Altimeter: Index and Altimeter had a bunch of co-investments, including companies like Confluent and ClickHouse, to name a few. At least what I heard is that the Altimeter team started to hear about me in these board meetings—

Mm-hmm.

—that I wasn't in.

Yeah.

The founders were saying, “Erik from Index was super helpful on this specific thing.” The Altimeter guys were asking, “Who is this guy who's not here who's getting called out in the board meetings? Who's Erik?”

Who's Erik?

I knew Jim a little bit socially, and so I got to know them. It started with them thinking, “Do we want this function and this capability at Altimeter?” I was helping them think through that.

Then there was this moment where they were like, “Hey, have you ever thought about being an investor? You've done the hard part of showing that you can build trust with and be valuable to exceptional entrepreneurs, and you have a really interesting network. Would you have a desire to be an investor? We think you have great potential. If you wanted that for yourself, perhaps you could be great at that here.”

Index was a fantastic place. I was happy to be there and grateful to be there, but it was a no-brainer opportunity to go from human capital to being an investment partner, having a seat at the table, and working with Brad and the entire team at Altimeter.

I jumped at that, and that was a little over 2½ years ago. It's been incredible making the jump.

Congratulations. That's huge.

Thank you.

That's awesome.

Yeah.

2. Trust Becomes a Superpower

You have developed a superpower throughout all this. Of the details that you mentioned—authenticity and trust—between all these relationships, what do you think are the key components of developing relationships with different people and talent?

I think you have to have curiosity. You have to take an interest in other people and actually care to get to know them. What's important to them? What do they care about? Maybe because I'm an only child, growing up I had to make friends. You have to take an interest in other people.

I think it starts with that. Then there's the simple thing of: it's not what everybody can do for you; it's about what you can do for everybody else to earn the right to have a relationship or a friendship with these people, to be a part of their career journey or their life journey.

I say that from a position of privilege. If you're working at Khosla, Index, or Altimeter, you're in the ecosystem. You're going to benefit from being a good actor in the ecosystem, whether that's in the short term, when you earn the right to invest in a company, or it comes back around because you did the right thing for somebody else.

Careers are long, and venture cycles are long. It was a couple of those things: just being curious, genuinely wanting to get to know people, and being useful and helpful. In venture, in this ecosystem, these are incredible people doing inspiring things and pursuing important missions.

If you don't love it, maybe it's hard to do. But if you have that love of the game, if you're interested in and curious about these people, then it's kind of heaven, and it's at least somewhat easy.

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3. Real World Tech Wins

So you're particularly focused on real-world technologies, like aerospace and defense.

Yeah.

How did you get interested in that after being exposed to all of the categories?

Yeah. I think, one, it's just cool.

Yeah.

It's just cool. And then, two, as I think about companies, it all comes back to people and talent, right? I believe that if you can create a fundamental talent advantage at the human level within your company and get a high density of talented people, you have better odds of success, and the magnitude of success can be a lot larger.

Talent is the leading indicator of success for any organization, right? This was ingrained in me at Khosla—or, excuse me, at Index. The team you build is the company you build.

I just think that companies in deep tech, aerospace, defense, energy, autonomy, mining, robotics, and all these categories are seeing a new class of entrepreneur go after opportunities that were trained at or had success at Palantir, Tesla, SpaceX, and so on.

Not only are these massive market opportunities—truly huge slices of the economy that haven't been attacked by entrepreneurs with venture capital in a while—but they're also too daunting for most people. Most won't even try.

Mm.

Even fewer are capable of pulling it off. But these couple of teams, paired with venture dollars, can attract exceptional talent into the company at an early stage because there's nobody else doing this thing.

If someone is passionate or wants to work on something that's meaningful, difficult, and challenging, but that, if successful, is really going to leave a mark or have an impact, there aren't 50 companies doing the thing. There's one or a couple.

Again, you can consolidate and get this dense pool of really talented people into your business, and that just gives you the strategic advantage. I like companies where you can stack the deck in your favor.

Mm-hmm.

I just think companies in this space have a fundamental advantage when it comes to talent.

You're writing over $100 million checks now. You go from human capital straight to $100 million checks. That's truly incredible. And you're doing it for Altimeter, which is traditionally very well known as a software investor. How did you convince Altimeter, Brad, and the team to get into this space?

It's helpful when the entrepreneurs you're building conviction in and putting in front of the team are great. The team is good at recognizing greatness.

But it stems from a lot of data and a lot of market work pointing to what is changing in the world. What is this supercycle, or why is now the right time to go after some of these opportunities?

Obviously, our investment in SpaceX helped inform our investment in K2 Space. With Anduril, it was pretty clear how exceptional the team was, what they were doing, why they had a fundamentally better cost structure and business model, and how they were being innovative to capture a very large market opportunity within defense.

Convincing the team means doing a bunch of work and explaining the size of the opportunity, why this team is uniquely well-suited to go after it, what their insight is, what it's informed by, and why they've earned the right to go after it.

Going back to my human capital days, you can identify the difficult or hairy things that aren't perfect yet, but you also can see, "Okay, well, I know how to help on that thing," or, "I know that that's the worst it's ever going to be, and it's going to improve over time."

You can build fundamentally better businesses, which we can talk a bit about in terms of some of the trends within space or defense. Our team is smart, and so when you present the data, meet the teams, and hear the teams come and present—"Here's what we're doing. Here's why it's different. Here's the size of the prize. Here's why we're going to win"—it makes it easier to convince the team, or at least communicate my conviction based on all the work that I've done.

4. Anduril Rewrites Defense

I want to dig into a couple of your companies. Let's start with Anduril.

Okay.

Okay, so let's break this down from a deals perspective.

Yeah. After I joined Altimeter, one of the first things I wanted to do was invest in Anduril. I had a deep belief in it for years. I hadn't had the opportunity to invest in the company, but I was like, "God, this is just obvious to me." The team is so good, and how they're going about attacking the market is just—I thought it was an obvious, great venture bet, and I thought it was destined to be a wild success.

I joined and was like, "Okay, we need to invest in this company." There were some preexisting relationships with Brad and some of the team, but ultimately, it was our mutual friend Christian who reconnected us to Trey.

Oh, yeah.

We spent a bunch of time with Trae, Brian, and the team over there, and pretty quickly realized that they were right on the cusp of some pretty special things.

In fall 2023, we made our first investment. For us, it was, "Hey, we understand your business. We understand your market. We are highly concentrated investors. We think diversification is the enemy of outlier returns, and so we want to earn the right to partner with you now. We want to concentrate and build a really large position in your business and help you go from the private to public markets and build an enduring, standalone, outlier, epic business."

Candidly, we flew down there, spent the time, and had a point of view. I think that's why. That, coupled with the brand and some of the relationships, and I think they could sense our genuine passion and care for what they were doing, as well as how we could be a good partner to them as they scaled the business.

A clear power-law winner.

A clear power-law winner.

Yeah.

Yeah, absolutely.

And so what was the evolution? I guess, to reframe that, they're a clear power-law winner.

Yeah.

They've almost made a whole vibe reset within the defense industry.

It does feel that way.

It's cool.

It is cool.

They've got merch. They have really good design.

Good luck getting their merch.

Yeah, well, yeah.

Yeah, but they do. Jan and the design team have exceptional taste and almost a consumer sort of brand or affinity for their brand.

It's incredible.

Yeah, what they're doing with the anime—

It's incredible. Mm-hmm.

I think they should make a video game, maybe an anime series. But I think they're humanizing it, and they're also highlighting the importance of it—

Mm-hmm.

—and the importance of the mission, and they're doing it with so much authenticity, right?

Right.

I think that just resonates with investors, with their customers, and obviously with the talent that they're recruiting and retaining. People realize, "Hey, this is a really important American company."

It's crazy to me because they have created this whole movement and this new kind of positivity in an industry that was never viewed well in venture. Coming from a traditional venture background, defense wasn't something that you would look at. You were used to looking at software companies.

When they came around, they had a tougher time starting and everything, but now they have critical mass. Everybody wants to get behind them. They have ridiculous leadership. I'm curious: What have you learned from working with Palmer and Brian?

I think what stands out from them is that, one, mission matters and authenticity is important, right? Even though they got a bunch of flak early on and faced extreme backlash in some cases, or negativity, which is interesting.

There's almost unwavering support for the men and women who serve in the armed forces, yet there's so much hate and negativity for the companies that provide the men and women of the armed services with the capabilities, products, and tools they use to be effective in their jobs—to defend and deter and be safer. That's kind of interesting.

But I think, in spite of all that, they were driven by a mission and weren't going to be derailed by anybody else. Clearly, that resonated with people from ultimately Palantir, where they came from, and other great places that wanted to come work on something that mattered. They wanted to make a dent in the universe.

This is really hairy, and this is really difficult. Your family might not understand, or your friends, or whoever might look down on you or whatever it might be, but you're going to be building stuff that matters. They're really hard challenges. It's going to be super fulfilling, probably fun, and, oh, by the way, the wealth-generation upside for you personally is massive.

I think they've just done an incredible job with that, and people have come around to realize, “Yeah, this is important. I do want to work on something like this.” Hats off to them. They did it early on, before it was cool. Obviously, I always thought it was cool, but I don't think it's any surprise where they are today.

I guess, to break down Anduril further, I'd like to assume everybody knows what Anduril is because I know what Anduril is. You know what Anduril is.

Yeah.

It's everywhere.

Yeah.

But could you just give a high-level overview of Anduril and maybe their evolution over the years?

Yeah. Anduril is building a modern defense prime, leveraging software, AI, mass manufacturing, and design for mass manufacturing. It started out as, I think, initially, a border security company. I believe their first product was a sentry tower, kind of like a surveillance tower.

They now have many product lines across air, land, sea, and space. They recently announced the acquisition of Klaus, which is a ruggedized edge-compute and networking product and platform. They've got a whole suite of products underwater with Dive, Copperhead, and sensor networks. They've got all types of counter-UAS, and they've got drones.

They've got Fury, which is their Group 5 autonomous drone for the CCA program. They've got Roadrunner. They've got stuff in space. They've got Barracuda. They've got multiple business units and a whole bunch of products, and, oh, by the way, it's all stitched together with Lattice, which is a modern software platform that makes everything work better together.

Ultimately, the government is just getting a lot more value per dollar of spend by buying from Anduril. They've done a great job with organic R&D and innovation internally, and they've also done an incredible job with inorganic growth and making acquisitions that are very strategic.

They've identified requirements and programs that the government has clearly said, “We need this,” and they've identified the technology. That technology probably never would have found its way into the hands of the government or the warfighter without Anduril. They've made some incredible acquisitions, which have led to Dive and Fury and really transformed the trajectory of that business. They'll continue to do that.

At this point, the growth is pretty incredible. Obviously, the brand is incredible, and I think the reputation of what they're doing and how they're doing it is incredible. That's a high-level overview.

They're intense.

Yeah, they are. They're intense, but they're also driven by the mission. They're also just fun, down-to-earth people to hang out with.

They've mastered how to resonate and build trust with the customer in D.C., sell to the government, and capture those programs, which, again, I think comes back to trust and really understanding. Then you've got Palmer, Brian, and the team, who are just exceptional at both hardware and software product development and at getting more innovative products into the hands of their customers.

That gets more bang for your buck, which ultimately means you are saving taxpayer dollars. The taxpayer or the government is going to spend this amount of money, and they're just going to get a lot more for what they're spending.

I listened to Brian at the Hill & Valley Forum, and one of my biggest takeaways from one of the clips was that they're not bottlenecked by manufacturing. They're bottlenecked by regulation. Have you noticed that?

Hmm.

Have you noticed that?

I think there are definitely challenges, like getting things certified and testing at certain ranges. There are, in some cases for good reason, certainly hoops to jump through for these companies.

They're feeling the pain more intimately day to day as the operators of the company than I am as an investor. I think they're doing incredibly well, but I'm sure they could be moving even faster in certain areas.

5. K2 Space Bets Bigger

So another one of your portfolio companies that I want to break down is K2 Space. Could you share more about the company and how you got introduced to them?

Yeah, absolutely. Karan and Neil, the founders of K2 Space, are brothers. Neil spent a bunch of years at SpaceX, and the team is just an incredible group of engineers who were long-tenured at SpaceX, including some of the core people from Dragon and Falcon 9, and even Starship, Starlink, and Starshield.

They're building very large satellites. The insight they had working at SpaceX was that SpaceX was going to own launch and absolutely own proliferated LEO, which is low Earth orbit, and that's where its Starlink constellation orbits.

Now there's MEO and GEO. There are other orbits, and there are benefits and interesting use cases in those orbits, both for the government and for commercial use cases. But in those orbits, you need to design a specific kind of satellite for them, and SpaceX had no desire or interest to do that.

K2 had identified a really interesting market opportunity: “Hey, we can build very large satellite buses where we can stack 10 of them in a Falcon 9, and we can deliver unprecedented capability and performance into these other, upper orbits at a price that's drastically lower than anything that had ever been done.”

For example, Viasat-3 is from a legacy satellite operator. Viasat-3 was one of the most high-powered satellites ever launched into orbit. I think it was 26 kilowatts of power and cost $500 million-plus to make.

Oh, my gosh.

You can launch 1 of them at a time. K2's satellites are 20 kilowatts apiece. You can launch 10 at a time and, call it, have a 10X reduction in price.

You can have 200 kilowatts of capacity launched into space: 10X more capability at 10X cheaper cost. Part of that is that this team came from SpaceX. They know how to vertically integrate and build all of the subsystems and components from scratch.

If you're just an integrator and you're buying from the supply chain, you're going to buy a reaction wheel from Honeywell that's going to cost $2 million apiece. They can build theirs for a 10X or 100X reduction in price, and you do that across the entire bus.

The fundamental insight was that the cost to launch a kilogram of mass to orbit was historically super expensive. Everyone spent a ton of time and money shrinking the size of things, but there were massive trade-offs: The smaller something is, the less capable it is.

It was so expensive to launch anything into space that you wanted to make it as small as possible to make it as cheap as possible. Now SpaceX has bent the cost curve down so far on the cost per kilogram of mass to orbit that it was just inevitable that things were going to get bigger again.

Bigger is better in space. You can have more power, more aperture, and more mass. All of that leads to being more effective. The more power you have, for instance, if it's a communications use case, the more directly tied it is to bandwidth or throughput capacity. Bigger and more power equals more dollar signs.

And this is critically important for both the DoD and GPS, because positioning, navigation, and timing are all in MEO. There’s a major mandate from the Space Force to proliferate across all orbits. SpaceX’s Starlink already owns LEO. Starlink and Starshield, which is its government constellation, already own LEO. MEO and GEO are up for grabs.

Mm-hmm.

You have to design specifically for those orbits, which K2 Space is doing, and bigger is critical for both of those environments. So, yeah, it’s multi-orbit proliferation. They’re building multi-mission, multi-orbit, very large satellite buses for government and commercial use cases.

Tying in your superpower and your background to your companies, how do you support them in ways that you’ve seen other investors not? I guess, to reframe that—

Hmm.

What do you think the biggest difference is in your approach to supporting founders versus traditional VCs?

I can’t speak for all traditional VCs. I know what I do and how I like to partner with my founders. Again, it comes back to talent being the leading indicator of the success of any organization. The team you build is the company you build. The best team wins.

I spend a lot of time with the companies identifying, “What do we need to be great at? Do we have the people, the team, the person who is great at that thing we need to accomplish?” If not, we need to identify that person and get them into the business.

It’s a constant process. As soon as you solve one, you’re—

Right.

Onto the next. I spend a lot of time with the founders thinking through the team and the organizational structure. What are the things that are important for us? What do we need to be uniquely great at? What are the biggest risks? What are the biggest opportunities? How are we identifying and pursuing those opportunities? How are we getting the people who are the best in the world at those functions into our company, properly incentivized and motivated?

Everything that shows up in a spreadsheet, a hype video, or a customer’s hand is just an output of what a person or a team did, right? That’s it. I spend a lot of time on the people element, as well as the structure of the business. Are we building a great business, and are we keeping in mind the ultimate goal, which is to build a self-sustaining, enduring public company? Companies are staying private longer now, but I still think that’s the goal.

I think one of my deeper questions is, we’ve seen throughout this category that it’s newer, and that there’s a vibe shift going on with it being in the spotlight. Are the companies having trouble, or are you having to support them further from a recruiting standpoint? Or is talent running out the door?

I spend a lot of time pre-investment, before we decide to do something, building conviction around whether these founders can recruit.

Mm.

Of course, you’re always going to need to help them, but the beauty of a company like K2 Space is that Neil and Karan are talent magnets. They have reputations. Other people they’ve hired were respected leaders or managers in roles at SpaceX. They have followings.

Going back to the core nucleus that you start a company with, or as you make each incremental hire, people are like, “That person went there? I want to see what’s going on there. I want to join.” I do think it’s important for founders and leaders within companies to be great at recruiting. You cannot be a great leader, CEO, or founder if you’re not great at recruiting, in my opinion. But yes, there are also times where it is helpful for a board member to recruit an executive or to have a conversation, sometimes with a recruit's significant other or husband or wife, to give them an assurance of like, help them understand the business or the backing or the support that they have. And so absolutely, I spend, like, you know, a half an hour of my time or an hour of my time helping one of my companies, um, recruit a transformational sort of hire that's gonna spend 60 hours a week or more in the business, is just, like, an unbelievable amount of, amount of leverage and, like, a great use of my time.

Anduril made a really good recruiting video.

They did. Very good. Employer brand is important, and ultimately, you want to put that out there so people self-select into, “I want to be a part of that. I know what I’m signing up for. I want to go be a part of that.” Anduril has done a really good job of that.

Now I spend time with the founders thinking about the next big domain in which we could build a business unit. Who’s the best person in the world to come run that business unit? How do we start to build that relationship, and how might we think about creating that with them? That’s also really, really fun to do.

Wow. I want to shift over to the broader structure and strategy of Altimeter. As I mentioned earlier and as we’ve talked about a bit, Altimeter is very known for software investing. Hard tech, hardware, and space are new. But you’re also a crossover investor.

Mm-hmm.

You’re on the private side, and then you do public investments as well. You’ve invested in some pretty incredible names, like Snowflake, CoreWeave, Hammerspace, OpenAI, Plaid, StockX, Uber, and Airbnb. I’m really curious: How does that structure influence the way that you invest?

Hmm. Me personally?

Yeah.

What I think is great about Altimeter is that we do have public and private investments. Brad founded the firm with the goal of, “Hey, I just want to earn the right to invest in exceptional companies and exceptional entrepreneurs, regardless of whether they’re public or private.” So, an OG sort of crossover.

Now we have a dedicated public fund and a dedicated private fund, but the 2 absolutely feed into each other. For instance, all of the private investment that was going on in 2022 informed our public investment in NVIDIA, and our public investment in NVIDIA helped inform our private investment in CoreWeave.

Our relationship with Snowflake, which started when they were pre-revenue and still persists today, helped inform our investment in Simuha, which Snowflake later acquired; in Tabular, which Databricks essentially acquired; and in Sigma and ClickHouse.

We’re constantly thinking about what’s changing the world and how we’re connecting these dots. Everyone spikes in different areas, and everyone’s curious. I think it’s an advantage in terms of identifying supercycles and themes, then taking the time and doing the work to identify who the best teams are that are building in these areas.

Sometimes you just meet someone who’s incredible and is building something that maybe you have a prepared mind for, but you weren’t necessarily seeking out. So, it’s a blend of all that.

Molly O’Shea

How do you share resources between the 2? Does the public research help inform the private side? How does that—

Yeah.

... balance?

Every Monday, we spend literally a couple of hours together just talking about everything. Every day, even when people are traveling, we’ll open up a Zoom or talk on WhatsApp. People are constantly talking and sharing, so there’s a lot of dialogue—

Mm-hmm.

... amongst the team. Absolutely, there’s a bunch of data, resources, and different themes that we’re tracking that help inform the investments we’re making. We also don’t make a lot of investments.

Molly O’Shea

Let’s talk about that.

Yeah.

Molly O’Shea

Dig into the strategy there, because you mentioned you’re concentrated and do few investments.

Super concentrated.

Molly O’Shea

But you’re writing large checks.

Yes.

Molly O’Shea

Could you break that down?

Diversification is the enemy of outlier returns, so few things matter: less but better. We want to earn the right to partner with the couple of companies and teams that have the opportunity to build truly special companies.

We’re investing out of our 7th venture fund right now. Don’t quote me on this, but I think there have been fewer than 70 total investments on the private side across those 7 funds. Brad is a really great partner to all of us in saying, “Hey guys, wait for your pitch. Spend the time. Make 1 or 2 investments per partner per year.” Not that that’s a hard rule, but we do really…

We're not a high-volume shop. We're not making toe-hold investments. We spend a lot of time really intentionally identifying and building the relationships with the teams we're most excited about to make an initial investment and then earn the right to concentrate a significant amount of capital in each round going forward. And we are very comfortable writing a large check to start because of all that work that we've done and because of the conviction and belief that we have in the team and the market opportunity in the company itself.

We're happy to put a significant percentage of a fund into one company that's clearly hitting escape velocity or becoming an outlier. I think that's somewhat unique, and I'm grateful for it. I think it's the way to do venture capital. We believe in the power law. We don't believe that there's going to be 500 interesting companies.

There are going to be a handful. And so we're going to make fewer, better investments. We're going to put more capital into fewer companies that are our best ideas. It also allows us to spend a lot more time with each individual company, really understanding their business, really having the context on the industry, and really being able to help them as a result.

For me, I think this is a great way to do venture capital, and I think the way that we've set up Altimeter, at least for me, is awesome.

What's your typical check size and stage that you get into?

Yeah. There are no dogmatic, rigid rules at Altimeter. We will lead a Series A, and we will do a very large check into a quasi-public round, like an OpenAI or maybe the latest Anduril round. But if we're doing a Series A, it's typically a $15 million to $20 million check, or maybe $25 million, and then at growth stages, call it $50 million to $250 million or more.

So Sorcery is fortunate enough to be sponsored by Brex, a performance corporate card that helps you spend smarter and move faster. They've helped companies like Wiz, Scale AI, Anthropic, and more to be more efficient and scale faster.

What metrics or elements are you looking for when determining success in diligence?

Yeah. Early on, you're really looking at the team, and so I think if there are 10 reasons we invest in a company, maybe the first 8 are team, then product and market. Of course, you need to validate and confirm metrics on the business. The earlier stage, the less data you're going to have. The later stage, there's going to be a lot more data.

For software companies, you're looking for sales metrics, you're looking at ACVs, ARR, expansions and NDR within accounts, churn, gross margins—stuff like that.

How do you determine success in hard tech companies?

Yeah. Hard tech companies, early on you're looking at technical progress and milestones. Obviously, you want to see some pull and demand from the customer. It could be partnerships; it could be early program wins. Ultimately, yes, you need to be paying attention to the forecast, bookings, pipeline coverage, ACV, how that turns into revenue, and how that converts into, ultimately, earnings and free cash flow. And then how are you being mindful of the margins and the operating cash needs of the business?

6. The Exit Environment Shifts

I want to move into the exit environment, because you and your team have such an interesting perspective on this, being a crossover fund and having an eye on the public markets. Brad is a genius. He is the oracle of software companies and everything in general, and BG, too—big fan. Great podcast. I'd love to understand, from your perspective and the team's perspective, how are you guys thinking about the exit environment and navigating this very volatile year?

Yeah. Extreme volatility and uncertainty, right? Maximum tech uncertainty, maximum political uncertainty, maximum economic uncertainty. It's not the most appealing environment to go public in. Now, you still can do it, of course, right? If you have a great business, there's always going to be appetite from investors to invest in great businesses.

But there's also more optionality for founders in great companies than ever, and so there is a lot of private capital that is seeking return and is happy to invest at higher valuations into later-stage companies, which allows these companies to stay private longer. And so founders and companies have more optionality for capital than they historically have.

I think most companies' goal is to go public, be a standalone, enduring company in the public markets, but it's not the only path, right? As we've seen with SpaceX, they do biannual tenders, where if you're an early-stage investor or an employee, there are opportunities for liquidity, and they've done that very successfully, and you're going to continue to see that. Now you're seeing that more with Stripe and Databricks, and Anduril's still private. Great companies are staying private longer, and a lot of that value is accruing to investors who have access to those companies in the private market.

Some of those companies may never go public. Some of them absolutely will. And so I think you're just seeing the maturation of the capital markets and how to underwrite and partner with these businesses, regardless of the exit path that they choose. It's always going to be a tale of the haves and the have-nots, right?

I don't think there's a lot to worry about. If you're an early-stage investor in a company that ends up being SpaceX, you will be able to generate liquidity for your LPs, right? Now, if you're an early-stage investor that was overcapitalized and has a really high valuation and doesn't have any sort of secondary interest in the private markets or doesn't have a path to go public or isn't going to get acquired and you're kind of stuck, well, that's another situation entirely.

Do you think that we're just going to get stuck with a class of secondaries, and that'll be a new financial industry to breed off of?

I don't know if we're going to get stuck with it, but I certainly think that what SpaceX has done works well for them, their employees, and all stakeholders and shareholders. Ultimately, the longer you stay private, you have early investors and employees who might benefit from some liquidity. It allows you to manage dilution well. If you have a very profitable business, you can start to buy back your own stock.

And so I think you are seeing more creative ways for companies that are staying private longer to manage those things—the needs of their business, the needs of their investors, and the needs of their employees. Capital markets are going to form themselves around these special assets and these special companies to serve their needs.

More macro on aerospace, defense, and industrials: where do you see the biggest opportunity for the category?

Yeah. I think in aerospace and defense, there's a lot of opportunity. Anduril's on a roll, so they're well on their way. I think there's massive opportunity in space, hence the investment in K2 Space. Obviously, Anduril has a space division, as does SpaceX, so we think we're very well set up to capture a lot of the profit dollars of that market.

I think there's a really large opportunity in missiles and munitions, as we're seeing highlighted very publicly with the lack of supply of solid rocket motors or munitions and stockpiles being drained, given Ukraine and Israel. Rebuilding those stockpiles is super important for deterrence. Those are 2 of the big ones, I'd say.

Autonomy is getting there; autonomy across air, land, and sea is inevitable. Those are the big ones in defense, I would say, that are exciting, and so maybe it's nothing earth-shatteringly insightful there.

Are you as bullish on drones as everyone else?

We're talking about drones in the—

Yeah.

—you know, you have drones on water, drones underwater, or drones in the sky. I don't think there are going to be 100 massive drone companies. I think there will be a couple. I do think that drones are going to play a major role in future conflicts and in defense, absolutely.

There are going to be different classes of drones: large ones, small ones, medium ones, ones that are on the surface of the water, same thing. So there are going to be whole fleets of these. But we haven't made a standalone investment in the category yet.

I do think there are some large companies that can be built there. I think there are other use cases that are really interesting for drones, like drones for public safety. You're seeing this with Flock Safety's acquisition of Aerodome. I think that we will see a lot of police departments using these for public safety and policing communities in a way that they can more quickly respond to 911 calls or keep the community safe.

So I think you'll see really interesting use cases for drones there. I think you'll see drones for deliveries. So I do think you will see a lot more drones in general in the future. Other things we're excited about are energy, mining, minerals, autonomy, and robotics—massive opportunities in those markets as well, and some really exceptional talent entering those markets and building in them. And so we're spending a lot of time there as well to think about who we want to invest in and how we want to participate.

Well, we recently had Base on, and—

Yeah.

Justin and Zach absolutely crushed it. They did such a good job.

Yeah, Justin and Zach are just incredible. Talk about exceptional entrepreneurs: super complementary, with hyper-relevant experience. That was a no-brainer investment for us. We'd known Zach going back to his days at Thrive, so when he let us know he was starting a company, we were thrilled to be able to participate in the Series A and double down in the most recent Series B. We're big fans and supporters of what they're doing.

And they're executing violently.

Executing violently, yeah. I mean, the density of talent in that company is just unbelievable. They have this exceptional team, they've been able to raise money, and there's a big, bold, hairy market opportunity. But I really think they're the only ones who have a shot.

No, it's incredible. I remember in the interview, Zach was sharing that they've had people move to Austin just to work for the company, thinking that it's a startup—

Oh, yeah.

You know, they just raised their Series B. I mean, it's a huge Series B, but that's pretty incredible. That's when you know you have great leadership and a really good mission.

Yeah. Zach is pretty exceptional at pitching Texas, and Austin in particular. And then, back to mission matters: there aren't many companies you could go work at if you want to work on that problem, and so Base is probably the best one. For people who care about what they do for work every day, that's a unique opportunity.

Zach and Justin have been very successful at convincing people who have a lot of options in what they could do to come move to Austin to be a part of Base. And speaking about metrics and indicators, those are the indicators that really matter: Who is the team hiring? Because, again, that's the leading indicator to the success of any organization.

If you just track who Base and some of these companies are hiring, that's really how I build conviction. That's really what I think most investors miss, maybe back to your question earlier: Pay attention to that, really study that, and really understand—and have the ability to identify—the talent that's joining these companies. That is going to tell you a lot.

That's such a good place to transition to our wrap.

All right.

Okay, so I want to do something fun.

Okay.

I usually end these with future outlooks because I want to know what people are most interested in—predictions, that sort of thing. I thought it would be fun to incorporate Calshi.

Let's do it.

I pulled out some really good ones that are relevant for you.

Okay.

These encompass everything from AI to finance and whatnot. So the first one is best AI this month. You get to choose Gemini, Grok, or ChatGPT.

For me, it's ChatGPT, not even close.

Really? Are you using Deep Research?

I am using Deep Research. o3 is incredible.

Mm-hmm.

I do like Grok when I'm using X. Grok is super intuitive and in line with the product, and so that's super helpful. I'm not using Gemini, but I'm also not coding or using Cursor or any of the other coding agents. I think Gemini is quite popular with developers, but ChatGPT for me is just next level.

I've been toggling between Grok and ChatGPT, but I usually just go back to ChatGPT.

Yeah. What do you think?

I just need a separate interface. It needs to be outside of it, because sometimes I'm like, “Am I going to accidentally tweet this question?”

Oh, yeah. ChatGPT is just so good, and now they've got more memory. It knows who I am, and so it just gets better and better for me. I used Perplexity a lot early on, but I've really shifted over to just using ChatGPT, although I do spend a lot of time on X, and so Grok is helpful.

I don't use Perplexity at all.

Yeah, I don't really anymore. It's helpful. I enjoy it for really basic question-and-answer stuff, kind of like basic Google search-type stuff, but if I'm trying to understand something, doing more research, or asking longer-form questions, I do all that in ChatGPT.

Wow.

Yeah.

Okay, so the next one—we've got 4 of these, so buckle up. The next one: Who will be the top 3 wealthiest people in the world?

When?

I don't know.

I don't think Elon is going to get unseated anytime soon. Look at the companies he's building and the trajectory that they're on. I think—

I'm really surprised he's not in the top 3 for this right now.

Is he?

It might change, but right now it's Jeff Bezos, Mark Zuckerberg, and Larry Ellison.

Huh. Isn't Elon the—

Yeah.

Yeah, I think it's probably going to remain Elon. If I had to guess: Elon, Elon, and Elon. No—Elon, Jeff, and Mark.

Elon, Elon, Elon. Good answer.

Yeah.

All right.

Dylon, Dylon, Dylon.

Done. How many launches will SpaceX have this year? You can choose between above 160, above 180, and above 200.

I think it will be above 160.

All right, we're locking you in for above 160.

I think it will for sure be above 150, but given those options, above 160—maybe even 170.

Okay, yeah, these are pretty high.

I think they're very doable.

Okay, good to know. Oh, my God. This might throw you for a loop. Will the U.S. say that aliens exist this year?

Hmm. I hope they do, if it's true. I don't think they will.

No?

No.

Right now it's at about a 6% chance—

Okay.

We'll see if that goes—

All right, the odds are in my favor, then.

The odds are in your favor. Maybe that goes down. Maybe something happens.

Maybe.

Who's to say?

Yeah.

Well, Erik, this was so much fun. Thank you so much for joining.

Super fun. Thanks for having me, Molly.

Perfect. Hey, it's Molly. If you enjoy our interviews, check out our newsletter, Sorcery.vc, where we deliver a once a week top deals and tech headlines email, and also go deeper on our podcast interviews. Subscribe to Sorcery today, and don't forget to subscribe to the podcast on YouTube, Spotify, Apple, or wherever you listen. Link in description to sign up.