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Sourcery with Molly O'Shea

SpaceX, Palantir, Anduril & Onodrim | The Return of Conglomerates

SpaceX is now a $2 trillion company, but Christian Garrett believes its business is just getting started.

Molly O'SheahostChristian Garrettguest

Nov 13, 20261h 0mWatch on YouTube

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CHAPTERS

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Chapter summaries

SpaceX’s breakout year: growth, profitability, and the “few companies drive returns” view
Molly O’Shea opens by framing the year as a major SpaceX moment, and Christian Garrett describes why it stands out financially and strategically. He ties SpaceX’s performance to 137 Ventures’ concentration mindset: a handful of exceptional companies can dominate return outcomes.
- •Christian Garrett says 137 has invested in SpaceX for 16 years and calls it their largest position
- •He cites rapid top-line growth and strong profitability figures shared after recent earnings
- •He characterizes SpaceX as a dominant provider across multiple critical industries
- •He argues that only a handful of companies drive most returns, shaping how 137 is built
SpaceX as a hyperscaler: vertical integration across AI apps, models, and compute
Christian Garrett lays out a thesis that SpaceX is increasingly operating like a hyperscaler, building software and services around a compute stack. He emphasizes how vertical integration helps manage risk across shifts in model economics and demand cycles.
- •He says SpaceX is building more software and services around its compute stack and is committed long-term
- •He highlights sub-12-month payback periods as a demand signal, based on what management reiterated
- •He frames SpaceX as vertically integrated from app layer to model layer to compute monetization
- •He notes the ability to reallocate capacity to internal products if external demand changes
- •He argues speed of building and pulling back capacity reduces CapEx duration risk
“Is SpaceX an AI company?” revenue mix shifts and the conglomerate-style structure
Molly asks about a perceived narrative shift—from launch and exploration to being framed as an AI company—and what that implies for comps and valuation. Christian responds that the mix is a moment in time and compares the company’s multi-line exposure to historical conglomerate benefits, but with modern differences.
- •Molly references reporting that over 50% of revenue is attributed to AI in some capacity and asks what to make of it
- •Christian says fast growth in AI is happening from a smaller base relative to other business lines
- •He argues launch and Starlink are on different S-curves that play out on different time horizons
- •He says revenue mix will shift over time as other lines grow
- •He connects this to an interest in how multi-business companies can compound across cycles
Starship, Starlink V3, and how lower launch cost unlocks new markets
Christian argues that Starship progress and Starlink constellation upgrades remain underappreciated, and that falling infrastructure costs create downstream company formation. He uses examples of businesses built on lower-cost launch to illustrate how platform economics expand the opportunity set.
- •He says Starship is working and mentions payloads supporting Starlink V3 satellites delivering compute
- •He describes the scale of Starlink’s planned deployment and its implications for capacity growth
- •He points to cost declines in launch (starting with Falcon 9) enabling new kinds of businesses
- •He cites Varda as an example of a business built on lower-cost launch enabling new services
- •He predicts Starship could drive launch costs down by an order of magnitude and expand the universe of viable companies
Compute in orbit: timelines, constraints on Earth, and category formation
Molly presses on what breaks open “compute in space” economics, and Christian discusses publicly shared timelines and why orbit-based data centers appear increasingly inevitable. He situates it as another vertical-integration advantage and notes early signals from other companies testing deployments.
- •Christian references a publicly delivered timeline aiming for first orbital compute satellites in the back half of next year
- •He notes constraints on Earth, especially power, as a driver for in-orbit data centers
- •He mentions Google testing an orbit deployment and points to companies like Starcloud emerging
- •He frames this as an example of infrastructure cost declines enabling new layers of value creation
- •He reiterates that Starship’s full reusability is the key milestone for major cost and cadence impact
Financing the AI build-out: debt markets, cost of capital, and underwriting uncertainty
Molly asks how financings and debt are shaping the “neo cloud” landscape, and Christian describes market volatility and questions around revenue visibility and capital access. He underscores cost of capital as decisive when much capacity expansion is debt-funded, and explains why forecasting is unusually hard now.
- •Christian says recent public and debt market volatility is mixed with macro and election-cycle dynamics
- •He notes investor questioning about revenue underwriting to support spend commitments
- •He emphasizes speed, payback period, and cost of capital as central to data-center build-outs
- •He says certain companies benefit from lower cost of capital and can absorb demand at better rates
- •He argues pricing companies now depends on believing out-year earnings, which is difficult amid uncertain market structure
Why 137 backed Cognition and Hex: durability at the harness/app layer and third-party positioning
Christian explains where 137 has placed higher-conviction AI bets and why, highlighting Cognition and Hex. He frames their positioning as helpful for customers who don’t want dependency on a single lab and emphasizes routing across models for sensitive or complex workloads.
- •Christian says 137 has invested significantly in Cognition and co-led a round for Hex
- •He places both companies at the harness layer and app layer, with third-party structural positioning
- •He notes some customers don’t want reliance on a single lab, citing security and coding as examples
- •He suggests model routing flexibility is valuable, and calls out analytics and data workflows as key contexts
- •He contrasts these bets with categories he finds harder to underwrite for long-term durability
What matters more than a single-year growth spike: duration and compounding
Molly asks what growth rates and metrics matter, and Christian argues that duration of compounding dominates single-year growth rates. He uses SpaceX as an example to explain why long-run consistency is the real driver of exceptional outcomes and how it shapes 137’s concentration decisions.
- •Christian says metrics depend on business type, but he focuses on strength and quality of growth
- •He cites SpaceX compounding around 40% for 20 years and stresses duration as the remarkable part
- •He discusses how even modest annual rates become powerful over long horizons due to compounding
- •He says 137 concentrates when it has conviction a business can compound for decades
- •He notes they are minority shareholders and want to remain excited about holdings 10–20 years out
Are investors overpaying for winners? premiums, capital crowding, and the fintech “graveyard”
Molly challenges the role of momentum and rising valuations, naming several high-valued companies, and asks how much reflects fundamentals versus capital flow dynamics. Christian responds that overpaying happens everywhere, that quality matters more than discounts, and that power-law outcomes can justify crowded categories even amid many failures.
- •Molly discusses the rising “floor” for private company valuations and references premium tolerance in competitive rounds
- •Christian argues paying a premium for a high-quality asset beats buying a low-quality asset at a discount
- •He says today’s pricing reflects both real growth and too much capital chasing too few opportunities
- •He describes fintech’s boom-and-bust dynamic, with many dead companies but massive winners still emerging
- •He reiterates the power-law nature of venture and growth investing: a handful of companies drive outcomes
Anduril and modern conglomerates: shared platforms, synergies, and dual-use scale
Molly turns to Anduril and Christian expands on his “return of the conglomerate” thesis, distinguishing past conglomerates from modern ones. He argues today’s winners share a common operating platform and/or vertical integration, and makes a case for dual-use conglomerates spanning commercial and government demand.
- •Christian praises Anduril as executing on long-held ideas and links it to repatriating manufacturing capacity
- •He explains why old conglomerates lacked operational synergies and were hard to value via sum-of-the-parts
- •He says modern conglomerates can share a core tech platform and gain real synergies
- •He describes Anduril’s Lattice software as a backend layer where each marginal product increases the value of others
- •He argues the West needs more dual-use conglomerates, citing Palantir and SpaceX as current examples
Why Christian co-founded Onodrim: building a European defense-industrial scale-up platform
Molly introduces Onodrim and asks Christian to walk through its story and upcoming announcements. Christian describes Onodrim as acquiring and scaling European aerospace and defense businesses by deploying technology, investing in CapEx and products, and creating pan-European champions to address production bottlenecks.
- •Christian describes Onodrim as an aerospace and defense scale-up platform focused on acquiring and modernizing businesses across Europe
- •He references U.S. analogs (supplier consolidators and acquisitive primes) and says Europe lacks comparable consolidation
- •He argues Europe’s fragmented market makes scaling and tech adoption difficult for smaller industrial businesses
- •He says Onodrim targets the underfunded supplier layer beneath highly funded “neo-prime” companies
- •He mentions plans to announce early acquisitions and partnerships with leading defense and commercial companies
Europe’s crowded drone landscape vs. the underbuilt supplier base
Christian emphasizes that while many new defense startups are being funded, the true bottleneck is production capacity at the supplier level. He argues that scaling suppliers, modernizing operations, and repatriating missing capabilities are necessary for Europe’s reindustrialization and rearmament efforts to succeed.
- •He says there are thousands of drone companies in Europe and suggests the category is overcrowded
- •He argues the supplier layer—components, aerostructures, engines, and other inputs—needs scaling
- •He claims production is a key bottleneck even when contracts flow to primes
- •He highlights the need for someone to take CapEx risk and modernize manufacturing to deliver faster
- •He notes some capacity no longer exists locally due to past offshoring, creating vulnerabilities
Talent strategy and operating lessons: recruiting cross-domain teams and learning from the other side
Molly asks how to access talent for this overlooked layer and whether co-founding changed Christian as an investor. Christian describes building a team spanning private equity, defense, government, and tech, and says operating exposure improved his empathy for founders and clarified what investors should actually do.
- •Christian describes recruiting a team with backgrounds across private equity, aerospace/defense, government, and tech
- •He mentions bringing people from places like Palantir, SpaceX, and Rheinmetall, and notes a multi-national team dynamic
- •He outlines acquisition screening criteria such as durable revenue, low churn, and solving critical bottlenecks
- •He says he didn’t plan to start a company and positions himself as a minority co-founder helping where he can
- •He says operating experience revealed “annoying” venture behaviors and sharpened how he supports founders (especially on talent and revenue)
Why tech isn’t zero-sum—and the risk of political weaponization of companies
In the closing stretch, Molly asks about two broader themes: political weaponization and tech’s non-zero-sum nature. Christian argues that tech’s growth and culture have enabled collaboration, and warns that politicized attacks on companies—regardless of side—could undermine innovation and national resilience.
- •Christian says tech is unusually non-zero-sum compared to many other industries and argues it’s important to preserve that culture
- •He expresses concern that increased petty fighting signals a shift toward zero-sum behavior
- •He traces political weaponization concerns from social media to broader politicization of company perceptions
- •He argues companies often contain diverse political views internally and build products with broad economic and security importance
- •He says consumers can opt out of products without escalating to destructive actions and warns politicized approaches may backfire

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