Phil Beauregard / Impellent Ventures
With a background that spans startups, exits, and investing, Phil Beauregard brings raw energy, humility, and a deep belief that world-changing ideas can come from anywhere. He’s an Ivy League grad, ex-investment banker, and serial entrepreneur. Now, managing partner at Impellent Ventures, Phil and his team focus on uncovering the next unicorns in emerging regions, from overlooked cities to unexpected founders. This is one you don’t want to miss.
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Transcript:
Nicole Eaton 0:00
Hey, welcome to Start Here, a podcast sharing the stories of active, aspiring, and accidental entrepreneurs. I’m Nicole Eaton.
Dave Bradbury 0:12
And I’m Dave Bradbury. So let’s get to the show today.
Nicole Eaton 0:15
We sit down with Phil Beauregard, entrepreneur and managing general partner at Impellent Ventures. Welcome,
Dave Bradbury 0:22
Phil. Good morning.
Phil Beauregard 0:24
Thank you.
Dave Bradbury 0:24
All right. Thanks for joining us, but I want to just jump in. Why do top founders want your money from Impellent Ventures?
Phil Beauregard 0:31
Wow, you don’t even mess around, do ya?
Dave Bradbury 0:31
No warm-up.
Phil Beauregard 0:33
No breakfast, nothing like that. Why do top founders want Impellent’s money?
Dave Bradbury 0:40
Yeah, you sell money to founders. So why do they? Why would they choose Impellent? What part of your way?
Phil Beauregard 0:48
So when we first started prosecuting our strategy at Impellent Ventures, we kind of coalesced around a common theme. You know, getting into venture, I had a decision whether or not to join the Navy or be a pirate. Joining the Navy was in the form of going to some of the bigger firms. What you don’t know what’s going on nowadays is there’s this big bifurcation in venture that’s occurring. 75% of the dollars are going to top 10 firms. It’s billions of dollars they’re turning into RIAs, which are retail investment advisors. So it’s these huge shops managing tens of billions of dollars: Andreessen Horowitz, Sequoia, Lightspeed, General Catalyst. And these are just absolute juggernauts, and I wouldn’t necessarily call them venture capital anymore, to tell you the truth. Right? And I’m going somewhere with this; it just may take a little while. So excuse
Dave Bradbury 1:44
We don’t have a gong. We do have a gong in the main room, but not for this.
Phil Beauregard 1:48
Excuse my meandering, right? So, but it’s important to the story. You have these massive firms that once were very innovative shops, and they really coalesced around bringing themselves back to Silicon Valley. So if you hear any of the podcasts, you hear people talking about how the greats—the people that I grew up kind of saying, “Oh, my God, these guys make such great investments,” like Peter Fenton and Ben Horowitz and all the guys from Sequoia and Index and so on and so forth. And they say, this is the place. This is the only place. This will be the place forever: San Francisco. It drives me fucking nuts, for obvious reasons. I mean, for anybody to have the hubris to say, okay, like oceans rise and empires fall. Do you remember Rome, right? There’s never been a time where there hasn’t been an empire or an organization that hasn’t fallen. So for them to all say San Francisco is the only place you can do venture capital and create artificial intelligence technology and do all of these things forever, full stop—it’s like, you don’t know if San Francisco is going to be the Borderlands or Fallout in 50 years. Never mind anything else. But putting all of that aside, that’s the art or the science that they’re practicing: moving tens of billions of dollars into a very certain set of companies. It becomes consensus capital. With all that being said, I’m invested in some of these firms. So it does have a place. And if you want to move a $100 million check like most pensions, then this is a good place to park your money, because you can’t go wrong betting on IBM. And you can get your classic 2 to 3x over a 10-year period, so on and so forth. What we’re seeing now is that on the other end of the barbell, there’s still a huge demand and a huge space for craft venture capital firms—the sub-$100 million vehicles, people that can be nimble, people that are truffle pigs, people that are pirates, people that were once entrepreneurs. And you’re seeing a lot of these, and they’re amazing. They’re sitting there saying, I’m going to raise $100 million or less, and I’m going to go and get as early as humanly possible, invest with conviction, try to get ownership, invest at a sub-$10 million, sub-$20 million valuation, and try to help those companies create optionality to the point where they can get to the Andreessen Horowitzes and the Sequoias and so on and so forth. And there’s just such a massive amount of alpha at that stage. And by alpha, I mean you can get an 8x or a 10x on a fund. Historically, there’s been no fund that’s greater than $100 million that’s created greater than a 5x return.
Dave Bradbury 4:35
Right. So in our experience, we’ve only seen the greater than 4x returns on the first two checks, which are pre-seed and seed. And we’re tiny, not in your league by any stretch.
Phil Beauregard 4:46
So that’s exactly it. I mean, it’s math at the end of the day. And there’s a place for both of these types. So when I was making the choice to get into venture capital, it was, you know, join the Navy or be a pirate. Joining the Navy would have been more lucrative and probably a little bit more palatable to my wife and my family at the time, because those become kind of fee machines, and you’re guaranteed a certain amount of money and a lifestyle and so on and so forth. But I would say that the more entrepreneurial effort for the rank and file at venture capital firms comes from becoming a pirate, I would say, in building your own firm and your own brand and so on and so forth. So, circling back to your question.
Dave Bradbury 5:27
I was gonna get back to that, yeah. So why you?
Phil Beauregard 5:32
Yeah. So, you know, first things first, because you have a choice between getting one of these massive machines and these nation-states and getting all the resources they can provide you at a certain phase—which is totally advantageous in a lot of circumstances and a lot of times in a company’s arc. But I would say that you’re going to get a lot of personal attention from people like us, and specifically from us. We are not the types like Keith Rabois and crew saying the only way to do this is to pay the most attention and most resources to your successful companies. Forget all of the losers. That’s what they’re saying. I mean, you know, they’re not gonna—I think they’ve actually said the word “losers” before, right? So we don’t do that. We invest in 35 companies per fund. In every single one of those companies, as long as we’re still an invited guest at the table—meaning the styles match, and they want us there, and they want our help, and they want to reach out to us, and they want our advice—we are going to show up at any time, any place. I mean, we are that call in the middle of the night. And it just so happens that I think, one, we have experience. I mean, we can see around operators. Yeah, I mean, this is Sparta, right? Like, there are scars all over the bodies at Impellent, and we all have various experiences. We’re all very different. But one thing that makes us who we are is that we all have that experience in different capacities as entrepreneurs, and we all have our specialties. It’s like a SEAL Team Six. Also, we share values at the firm. So with that being said, why Impellent? It’s because you are going to get the attention; you are going to get the help. You’re also going to get the help of—and some firms can boast this, I would say, in the emerging manager or the sub-$100 million sector—you’re going to get our LP base as well. And our LP base is comprised of, yes, sure, the state of New York and some institutionals, which we’re very blessed to have at this stage. But in addition to that, you know, Jason Robbins of the world, Mike Salguero of ButcherBox, Jason’s from DraftKings, obviously, some of the HubSpot folks, Rich Miner from Google Ventures and Android, and Andy Palmer. There are just so many people involved with our firm that can open these worlds. So it’s almost like—I’m probably dating a lot of the audience here—but Minesweeper, right? Like each one of our LPs is that thing that opens up a new part of the map, as long as you don’t step on a bomb. So I think that has a lot to do with it. I wouldn’t say we’re the only people that provide that sort of stuff, but we certainly provide our own unique brand. The last point is—and I know you probably want to move on to the next question—we fucking print money. You know, there’s been data, and our portfolio is outperforming 99% of the other portfolios in the United States of America right now. Yeah. So, I mean, you know, we’re there. Yeah. So it’s fucking data, right? Like, at the end of the day, we could say, okay, go talk to them. It works. I could talk about myself all day long. I’d rather not, you know. Like my wife would tell me not to.
Dave Bradbury 8:50
Let’s hope she listens. Yeah, all right, thanks. Thanks for that sort of set on Impellent and how you position yourselves in the firm.
Nicole Eaton 8:57
Yeah, I do want to just backtrack a little bit, and I want you to talk about yourself for maybe a minute or two, if you can. But you grew up in New Bedford, went to Wharton—just tell us about you. We’ll go back into this.
Phil Beauregard 9:14
Yeah, I think, I mean, like anybody else, I don’t think there’s anything wildly interesting there. I grew up in New Bedford, Massachusetts, obviously, which is, you know, at times a challenging environment. It certainly gave me a certain view of the world. And my parents were amazing, and they always encouraged reading and academic studies and stuff along those lines. You know, they gave us tremendous opportunities to see the world. We were always at museums or something like that on the weekends. And it was amazing. So I would certainly say I was gifted at math to a certain degree. And so I ended up going to Wharton undergrad, and that was great. I wouldn’t say I was the best student. I definitely had my own pursuits where I was figuring out who I was as an adult. That took until I was about 35 years old. But with that being said, if that’s even the case now—well, with that being said, yeah, it was New Bedford to Wharton, and then I started my first software company after two glorious years of investment banking as a junior, recovering investment banker. Yeah, two fantastic, amazing years as an investment banker. I started my first software company when I was 26 and sold it about seven years later, and then I started another one and sold that. So the first one was sold to Carbon Black, which was Bit9 at the time and then went public, and then HubSpot was the second company. Both were okay. You know, I’m certainly—they weren’t billion-dollar exits or anything else, or anywhere close to that. But with that being said, I would say that a tremendous amount of value in it was the experience. It was kind of taking my licks and that classic Mike Tyson-ism, right, where you learn that everybody has a plan until they get punched in the mouth over and over and over and over and over again. So by the time I was able to wake back up from my grieving after the second sale, or say, what do I want to do with my life when I grow up? Everything had kind of set in and gelled, and then I became the operator that I was supposed to be, in my estimation. And I spent about four years, five years as an extremely successful operator, growing companies, booking hundreds of millions of dollars in sales, closing hundreds of millions of dollars in financings, advising companies. I was also angel investing at the time.
Dave Bradbury 11:55
Yeah, right. Do we need to—originally?
Phil Beauregard 11:59
Yeah, and that’s the other thing: just the network, right? Like the people that were—and I say this honestly—the people that became willing to put up with me is absolutely—I just don’t understand it.
Dave Bradbury 12:17
He’s testing us, Nicole, right?
Phil Beauregard 12:20
I’m not kidding. Like, I mean, I can be a real pain in the ass, right? So, in a little—
Dave Bradbury 12:26
Did that come from New Bedford, growing up in a really scrappy kind of place?
Phil Beauregard 12:32
It’s actually a genetic mutation. My parents aren’t particularly obnoxious, but I am. So, yeah. So at the end of the day, it’s that network and all these different things that kind of coalesce. I wouldn’t say I’m the most successful person on earth, right? But within the realm of trying to be self-aware, I don’t know. I’m fucking happy. I do well, and I tend to think that, again, data—like, as far as this particular profession goes in doing what we do, it’s only four and a half years in for me, but it’s a hell of a good start. So that’s kind of the way that I view it right now. And I feel like I’m enormously lucky. Rather be lucky than good.
Dave Bradbury 13:15
What was your first job growing up? Or startup? You know, did you do anything?
Phil Beauregard 13:25
At the ripe age of 14, I had my dad sign a—in Massachusetts, in Westport, Massachusetts—sign an employment waiver that allows me to work. And I went and started washing dishes at a restaurant called Cape Codder’s in Westport, Massachusetts. And then that started an illustrious—again, that word—career in restaurants up until the age of 18, where I made my way all the way up to bartender. It was a meteoric rise.
Dave Bradbury 14:08
I was going to say, wow. What was your first job, Nicole?
Phil Beauregard 14:11
I worked at a grocery store, actually. Yeah, grocery. Yeah. Grocery store. It was fun.
Dave Bradbury 14:17
I worked for Farmer Yap, baling hay, and I think it was a buck an hour. Yeah, I think every young person should bale hay or work dishes.
Phil Beauregard 14:29
Sounds nice, actually, because the dishes thing was legit. You’re in a basement, and you have this Hobart machine that’s just belching fucking dragon’s breath at your face like once every two seconds.
Dave Bradbury 14:42
And you don’t know if it’s day or night in the basement.
Phil Beauregard 14:45
People are disgusting. And like, they’re like—people that were like—I remember this one guy, and I’m not gonna implicate him, because who the fuck knows where he is now—but he was one of the other dishwashers, and plates used to come in, and he used to take food off of them and eat it after people were done with it. It’d be like, dude, I don’t think that that’s a thing here. Or it was just—it was a very strange environment. But with that being said, I quickly, because of my amazing dishwashing capabilities, proved myself to become a prep cook. And then I was just off.
Dave Bradbury 15:30
Was that still in the basement?
Phil Beauregard 15:32
Yeah, no, no. Prep was in the basement, and I still have those knife skills to this day. And then I remember the manager of the restaurant actually said, like, we need your face out on the floor. And I was like, okay, it’s kind of weird—16 years old. It’s also a little inappropriate.
Dave Bradbury 15:47
Probably another form to sign at that point, another consent.
Phil Beauregard 15:49
Yeah, more like an NDA, right? Like I didn’t know what I was signing, but yeah. So I ended up becoming a busboy and then a host. And what the fuck are we talking about here? Let’s move on.
Nicole Eaton 16:02
No, but it’s your work ethic. Like, I think it does say something about who you are, because clearly you worked hard, and it didn’t matter that you were a dishwasher.
Phil Beauregard 16:13
Now that I think about it, it was that. It was one of the times that I—you know, we’re all just sapiens, right? We’re very Pavlovian. And, you know, reward mechanisms. I worked, and then I got a 1989 Chrysler LeBaron that was piss yellow. It had—I shit you not—a recliner that my dad had installed because the passenger seat broke. Can you imagine? I want you all to picture this, people listening—if you’re listening out there anywhere—like, imagine taking the seat out of a car and putting an old recliner that looks like it was red and it came off the side of the street, like it probably has bed bugs or like I have no idea. That’s what it was, and that was the best car on earth because I was cracking around in that thing in high school.
Dave Bradbury 17:07
Would you wish you still had that one in the garage?
Phil Beauregard 17:09
No, I don’t. Absolutely not.
Nicole Eaton 17:12
That’s funny. Okay, thank you. Fast forward: now you’re an Ivy League grad, and you’re working with a hip-hop star. How did that happen?
Phil Beauregard 17:24
I almost feel like sometimes I’m working for, you know, just because Khalib is so—Khalib is so larger than life. I grew up, you know, obviously listening to hip-hop and that sort of stuff. So The Roots were the first kind of band, the hip-hop band. They were truly a group like that. And Questlove and—or Amir and Tariq had come together. Their music was amazing. I went to school in Philly. They were from Philly, and they spawned—I mean, it’s one of those kind of mafias—so many different musical styles and bands. And to this day, like, you know, Tariq feels like he’s everybody’s big brother when he walks into a room, including, like, you know, Jay-Z or Jimmy Fallon or anyone. So I met Tariq when Twitter had utility back in the day, when it was a little bit of a different platform, and I’m no longer on it. I no longer use it. But back then I was pretty active, and I was talking to Rich Miner, the Android man, close friend, and we were just back and forth. He had a big following; I didn’t really. But Tariq somehow butted into the conversation, totally random. And I later learned that it was actually one of his people that was doing his tweeting for him, or X’ing, whatever you fucking kids call it nowadays.
Dave Bradbury 18:52
But I still call it tweeting. I don’t do it either.
Phil Beauregard 18:54
Yeah. Okay, yeah, X’ing sounds a little weird, but, um, yeah. So I ended up being like, is that Tariq, just Black Thought from The Roots? And so I ended up sliding into his DMs like a creep and just said, you’re probably not even going to read this, but my name is blah, blah, blah. Would you come to, you know, do some stuff at Harvard? Would you come and talk to some kids about you coming up in a fireside chat or something like that? To my surprise, he said yeah. So it got sponsored, and he came down and gave this talk to 50 people. Like, we had standing room only type thing—all sorts of people wanted to show up. It was a big hit. He dropped his first real viral freestyle there. Wow. It was the one before Funkmaster Flex that, you know, the epic 14-minute one. And Tariq and I just became the oddest of friends. Like, truly, it’s like Disney characters, right? Like Timon and Pumbaa, just weird bedfellows.
Dave Bradbury 19:49
Had he been an investor prior to—?
Phil Beauregard 19:51
Yeah, so Tariq—oh, yeah. So at that point, Tariq was really just kind of saying, what’s next? Because he’s been at the Fallon show since, like, 2009 or something like that. But he was more just thinking about what are some other things that could be interesting for my future. Tariq, like one of those athletes that’s always thinking ahead, like Iguodala or something like that, or Steph Curry. So one of the things that he was looking into—he knew Nas was doing some stuff tangentially with, like, Ring and PillPack and so on and so forth. And Tariq said, okay, well, I’m gonna make some investments. And we didn’t talk business, or at least I went off and was running companies, and Tariq was obviously on the Fallon show. And when I finally decided to join David—David Brown, the man that started Impellent Ventures, my partner, who’s, you know, the greatest amongst all of us as a human being—we reached out to Tariq being like, it would be awesome to have him as an LP, and Ahmir, you know, Quest, and Jimmy, and you know, their best friends are Dave Chappelle and Lin-Manuel Miranda and the Obamas. So they’re like, yeah, that’d be cool, right? That’s a little bit of a weird thing about Impellent. And so when we went to go meet with him in New York, he essentially just said, “Hey, listen, yes, but also, I’d like to learn what you guys are doing. I’d like to be a partner at Impellent Ventures.” And we said, well, that’s a different conversation entirely, right? Clear your schedule, yeah. So that’s how that came to be. And, I mean, Tariq—just a brother. Like, I mean, we text every day and stuff like that. It’s kind of weird sometimes, though, when I center myself and I’m sitting with him, because I’ll be sitting with him at 30 Rock—the studio is, like, backstage at the Fallon show. He has his own dressing room and all that sort of stuff. It’s across the—like, you’ll be sitting there, and like Steve Martin will walk by, and I’m just kind of like, holy shit. Like Steve Martin asked you where the bathroom is and learn stuff along those lines.
Dave Bradbury 21:53
Have you ever thought to yourself, like, okay, how do I win a Grammy?
Phil Beauregard 21:57
Never. Okay, I’m usually—I actually usually not. I believe it or not, like I have such a—I don’t know—my pulse stays the same at all times, so I don’t really care. But seeing Steve Martin’s pretty cool, like more through my dad, Three Amigos and stuff. But needless to say, it’s kind of like a third office for us sometimes. Tariq allows us to—
Dave Bradbury 22:16
It brings an entirely different network perspective to what you see—the distribution amongst you call them LPs, but it really is the unfair advantage that you—
Phil Beauregard 22:27
You just named the three things. Right: perspective is the biggest thing, because at the end of the day, like, I am a white male. No matter how many tattoos I get, like I have a very specific perspective, or at least, you know. And Tariq sometimes really throws some curveballs in our IC or just in meetings, saying, like, why are you thinking that way? There is very quiet, by the way. He’s one of those that just—he’s extremely funny, but he only says something when he really feels like he should be saying something. It’s almost like he’s saving his words. And, yeah, he just provides this amazing perspective. And exactly what you said there: he—I just named his friends. So, you know, if an entrepreneur is doing well and there’s movement behind it, he can be very, very helpful.
Dave Bradbury 23:20
I mean, we have two hip-hop captains on the UVM dance team. Well, Nicole’s Miss—she’s, you know, Miss New York City / Williston, Vermont, you know, that’s sort of how she rolls.
Phil Beauregard 23:35
We just brought—um, so we were in New York for Primary Venture Summit, which is this big meat market of an event. And we brought 15 people to the Fallon show backstage, and then sat in the audience. And then we all went to Avra across the street afterwards with Tariq and stuff and just had an awesome dinner. And it was—yeah, again. That’s just super, super lucky. You know, it’s cool, but I’m not gonna lie, like most of the time we’d rather be home with my four- and five-year-old and my absolutely gorgeous, amazing wife.
Nicole Eaton 24:13
There it is.
Dave Bradbury 24:14
Love it. Me too. I love hearing that. Yeah. Okay, who do you—I was looking for ideas on, like, who do you follow or read? Like, who do you think is, wow, I got to read Eric Paley’s post or Dave Frankel’s or, you know, where do you consume information that’s relevant to how you think and source?
Phil Beauregard 24:35
Nietzsche, like, you know, F. Scott Fitzgerald, you know, David Foster Wallace.
Dave Bradbury 24:41
Okay, we’ve established you’re thoughtful and part of the Illuminati.
Phil Beauregard 24:44
Excuse—no, no. Excuse my virtue signaling. I’m gonna be doing it this whole time. See if you can catch it. I’m like a Highlights magazine: perfect virtue signaling. I’m gonna drop these things. Was he virtue signaling? It was obviously virtue signaling. Go ahead.
Dave Bradbury 25:03
You comment back to, like, Harry 720 VC, like, okay, you like to—
Phil Beauregard 25:07
Totally, totally. I can rip here. So, um—
Nicole Eaton 25:10
I can rip here. I love that. That’s kind of like hip-hop-y.
Phil Beauregard 25:14
I’m super hip-hop. I was gonna say, like, if you look at me, you’re like, that dude is hip-hop, right? That’s the first thing people think. Like, what do you think, right? You’re looking at me like it’s all over—r/slash dude, yeah. All right, sure. Golf course. So the answer is, you did mention somebody out of the blue. Actually, we haven’t discussed this, but when I came into—when I came up in VC a very long four years ago, we, you know, I was doing a little bit of a listening tour. Mentorship has always been a thing, right? Let me do a little bit more virtue signaling. My father taught me that wisdom was one of the most important things. So I reached out to a lot of different people, and everybody’s been so helpful, right? Mine are, like all of our LPs, like my contemporaries, people that have done better than I have that are now our LPs that have these billion-dollar family offices where I’m still a little bit, you know, kind of pissed off that they won, so to speak. But there’s still some time left. I would say that one of my greatest mentors, whether he knows it or not, and the person that’s been truly most helpful, is a guy by the name of Eric Paley, like you said before. And I don’t know—it was almost strange to me that Eric, because I’ve known him for a long time, but it just feels like our interests—he stepped up the interactions. He was always there to answer questions. He was making intros. Like the guy was just golden for me, and he still is. And now he’s the Secretary of Commerce or whatever, economic development in Massachusetts. And if you don’t know Eric Paley, he’s been, you know—his first fund, he was an entrepreneur, right? Like he was the sub-$100 million fund guy with David Frankel and Micah and now Amanda and David Salzhauer and stuff like that, and Jack. But he’s built—they built this franchise in this firm, but the first fund they did was after they had both exited a company for like 75 million front-face. It’s so funny. I don’t know if Eric knows this, but I remember he essentially said to me, like, raising the first fund is so hard. He’s like, it’s gonna get so much easier for fund two. It’s like, yeah, if you have Uber in your first fund, it gets a hell of a lot easier.
Dave Bradbury 25:14
Yeah, a $50,000 state check, yup.
Phil Beauregard 26:52
Yeah, he wrote like 90 grand into it or something. It was like a 350x. Like, so, you know, life gets a little easier when you do shit like that.
Dave Bradbury 27:05
All right, so you see—read Eric and David.
Phil Beauregard 25:14
So I would say, no, I would say Eric. Eric is somebody, verbally, who’s been extremely helpful? Yeah, he writes perfectly fine. I listen to Stebbings. I like to get a pace on, you know, he has great guests. He’s an awesome interviewer. I like to get an idea of the fucking candy nonsense that’s occurring in the world. Meaning, you know, every time that Stebbings is like, you have to be, you know, two times three times three or whatever the hell it is, and working 996, and almost—
Dave Bradbury 26:12
He almost had an English accent.
Phil Beauregard 26:12
2020—no, no, I’m trying not to do that actually. 20—$20 million on 100 is now the standard. It’s like, fuck no. It’s not. Like you guys are all just completely diluted, and you’re in—that’s gonna be awesome. I mean, listen, like at the end of the day—
Dave Bradbury 26:12
There’s plenty of other opportunities out there that aren’t in that strata.
Phil Beauregard 26:12
I’d like to say something. I’m not a stupid person. I think—
Nicole Eaton 26:12
Agreed.
Phil Beauregard 26:12
So there are four decacorns in San Francisco to every one coming out in New York. Never mind everywhere else. That’s where it’s happening, right? It doesn’t fucking mean it’s the only place it’s happening, right? Like, it’s very helpful. The density is better than anywhere else in the world. In fact, after you start a company, go west, young man or woman, right, and allow that to supercharge your company if that’s where you should be doing it. With that being said, you know, that doesn’t mean that people aren’t starting companies in Burlington and in Philadelphia, in Rochester, Toronto, Austin, you know, like all of these places. And that’s—it’s gonna keep happening everywhere.
Dave Bradbury 29:30
I read correctly that about half your companies are in these sort of non—
Phil Beauregard 29:32
It’s kind of our jam. So, damn, so doing a circle back to the why you—circle back to the beginning of the conversation when I was giving this, you know, this rant about San Francisco and the history of venture and where it’s at now—like there’s a point to this, and at least in my mind. And the point is that, you know, you can practice venture capital outside of San Francisco. And the way that we choose to do it is we choose to get on planes to go meet people where they are, to meet the centers of influence in those cities, the people that have such pride for Burlington, Philadelphia, you know. Like, there are people that have created massive companies that go back to their hometowns and they build hospitals, and they’re awesome, and so on and so forth. Like, I don’t know, Hula, like, you know, like so on and so forth, yourself and everybody that’s here. And they have tremendous civic pride or town pride, whatever you want to call it. And so what we do is we go and we say, we Oliver Twist, we truffle pig, and we Oliver Twist. We walk up to David Bradbury and the guys at Hula, and we say, please, sir, can you give me some deal flow? And as long as we’re there often enough—and I will admit that I’m not here often enough, but usually we’ll visit places a lot.
Dave Bradbury 30:45
No, but you get—you answer. You get right back to me when I said, hey, here’s something kind of wacky we’re looking at.
Phil Beauregard 30:50
Let’s have a turkey club. Let’s enjoy a conversation. And maybe, just maybe, that’ll make you think of me when you have this company that nobody else has seen and you’re like, there’s just something about this entrepreneur that I like.
Dave Bradbury 31:01
Do you want to talk to—meeting with two of them?
Phil Beauregard 31:03
So that’s it, man. That’s where it comes from.
Nicole Eaton 31:06
Yeah. I mean, what—just explain. I know that you guys use the term “misfit founder,” which I love. What does that mean? Like, what do you see in that founder?
Phil Beauregard 31:18
I think you’re probably a little too young to remember—I think it was maybe The Year Without a Santa Claus or Rudolph the Red-Nosed Reindeer. It was one of those Claymation movies. That’s one of your jams. There was the Island of Misfit Toys.
Nicole Eaton 31:25
Of course I know Misfit Toys!
Phil Beauregard 31:32
Okay, sorry. I don’t know you. I don’t know what you whipper-snappers are into nowadays.
Nicole Eaton 31:38
Hopefully that never goes out of style, the Island of Misfit Toys.
Phil Beauregard 31:40
So, yeah. So we—again, they’re not misfits, but like they kind of are. They decide to start a company in Burlington. Or Burlington decides to start a company in them, right? And that’s where they are. They’re misfits. And guess what? And I’ll say it right here—there’s gonna be a little note. Hopefully somebody hears it. If I’m going up, from a competitive standpoint, against Hemant Taneja (General Catalyst) or Bryan Schreier (Sequoia) or Ben Horowitz (a16z), chances are—I’m self-aware that I may lose. I was about to say I’ll lose, but I’m not gonna say that, because I’m not that self-aware. I’ll compete against them, but if you put one of their fucking scouts up against me, I’ll wipe the floor with them every day. Right? Good luck. So Godspeed. Put one of your kids up against me and see who wins that deal.
Dave Bradbury 32:35
So you’re fishing in a lot of ponds that may not be as covered by the principals at these seminaries, right?
Phil Beauregard 32:42
A catfish in those ponds. Man, they just happen to—
Dave Bradbury 32:45
You pulled up the same fish at the same dock with 10 others. You know, you talked about backing, you know, 0.5% founders, right, the top of the top.
Phil Beauregard 33:01
Did I say a lot of stuff?
Dave Bradbury 33:03
Yeah, you do say a lot of stuff, but it retains—some of it sticks against the wall. What does she look like? Like, what are the traits that just pop off like? We look for undeniable founders, right? And we’ve got certain questions and characteristics and attributes, but I’m really curious. Like, what is that echelon where you just see it?
Phil Beauregard 33:26
I think that when I’m meeting—I’ll just speak for myself personally—like, when I’m meeting a founder, I’m sitting across the table from them. It’s usually a Socratic method type interview where it’s just question—I’m interrupting—like, I’ll just butt in and just try to get to what—and then I’ll just pick on things. Like, I just have this thing where I’ll just drill into certain things. But what I’m really trying to do is gauge who that human is. Because, you know, it is all about the human being. Markets change. Ideas change. You know, Slack was once a big video game. Like the pivots are all over the place. This is just the way things work. So you’re betting on the person. It’s ad hominem to a person. So how do I evaluate that person? I’m sitting there and I’m just staring them in the soul, right? And just essentially trying to say, is this the type of person I think that can win and persevere and be smart? It’s a big coefficient equation, and there are probably, I don’t know, like 50 variables. And a lot of them are the exact same variables that everybody else puts weights on, right, in the Valley or anywhere else: does their LinkedIn say fucking Stanford, right? Like, whatever. Who cares? Sure, it’s all a matter of—it’s fulcrums. It’s like, how much weight is on this, and how great are they? And then so on and so forth. So did they go to a great school? What did they do before? Did they sell lemonade when they were a kid? Like, you know, Hummingbird Ventures—were they DSM-level criteria? Like, you know, traumatized? Like, there’s all sorts of different things that you can kind of say, okay, this—I’ve seen this before, or there’s something special about this person. I think it is all of that. I think that in addition to that, you know, it’s also: is this somebody that, one, we can work with and we can help, and two, they want to be helped or they want to work with us or whatever that little thing is. That doesn’t mean calls every day or every week or anything else along those lines. I mean, one of our amazing entrepreneurs—and this is a little bit of a curveball—like, is Colin Kaepernick. Like, and Colin, you know, started this company called Lumi. And we talk to most of our entrepreneurs—most of our portfolio companies, including the ones that are $25 million ARR-ing, like crazy growth and already are going to make our portfolio—once a month. Usually, I’d say 80% of our portfolio companies, we talk to once a month, one of us. And Colin, we talk to once every six months. He’s a busy guy, and I’m not saying that that’s what we envisioned when we first started. We certainly don’t make a habit of investing in celebrity deals either. Like, we know what the data says about a lot of those. There’s just something about Colin Kaepernick. And it’s funny—if you sit there across the table from him and you’re like, does he have the perseverance that is necessary and the spirit and the will? It’s like, okay, we’re not gonna check those boxes. We’re gonna light that paper on fire, right? Like, and Colin—I mean, long story short, you know, we talked to him a month ago, and he’s like, yeah, he’s like, so we pivoted, but it’s tangential to what he’s doing. It’s still kind of in stealth. Go from 1 million last year—we’re like, you did 1 million last year—to probably like eight or eight to 15 this year. He’s like, and we’re at X and we have Y amount of revenue.
Dave Bradbury 36:45
Those are calls you want all the time.
Phil Beauregard 36:47
I was like, what the fuck is happening? Like, wait, how did you do that? And, you know, like—and so that’s when—so it’s just there’s certain things that you just can’t kind of put in a box. With that being said, I do have a philosophy on kind of how you can create the Renaissance Technologies of venture capital. It has to do with data, clean data, and compute. And actually there’s got to be a variable out there that enables us to really be able to tell—or a set of variables that gives us a 51% chance of picking the right entrepreneurs. I think that we’re almost there, just as kind of an ecosystem. And I think a venture capital firm—they’ve been trying to do it forever, right? But I think somebody is going to figure that out relatively soon, because we now have 60-plus years worth of data, and it sits in the SEC EDGAR database, LinkedIn’s API, Twitter’s API or X’s API, Crunchbase, PitchBook, so on and so forth. And if you triangulate all those things, you can see who starts a company and when, what it does, and whether—how it ends up. And so I think, you know, with the compute that we have, like, I think we’re gonna start to be able to get a little bit better at that.
Dave Bradbury 37:56
How fun is that? You’re gonna not start taking meetings and learning hour by hour?
Phil Beauregard 38:02
No, we’re not. I only need to be so rich, you know? Like I don’t need to be—I think multi-billionaires’ brains break at some point, right? And we’re seeing it in real time. What is it? 100 billion or something where, you know.
Dave Bradbury 38:17
I’ve not experienced that problem, so I can’t really—yeah. Yeah.
Nicole Eaton 38:20
Same. So I know we’re getting up to time, but what’s next for you guys? I know you just added a third fund.
Phil Beauregard 38:33
We did, yeah. So we—again, very lucky. So the first fund was David. He did 10.5 in Rochester with the whole thesis of connecting, you know, secondary ecosystems to primary hubs and mentorship and downstream capital. Very admirable. Gotta raise 10 million bucks, like at the beginning of COVID, which is bananas. David’s very likable. David and I are yin and yang.
Dave Bradbury 38:57
Most Davids are very likable. I found.
Phil Beauregard 39:00
Well, I mean, it’s funny. I say we truly are Riggs and Murtaugh. Like, yeah, you agree: yin and yang. And David is very likable and a really nice guy, and I’m the yang. So, you know, we did a $25 million second fund when we first came together with Tariq, and this one is looking to be about 50. We’ve done a first close on that. We’ve been very lucky, and most of it is due to the fact that our portfolio is so awesome. What’s next? We—I mean, we’re still—we have our hands in the dirt right now, right? Yeah, we were just there trying to do exactly what we said we were going to do, which is put our rucksacks over our shoulders, travel, you know, like vagabonds around the country, get people to notice us, and then provide as much help as humanly possible, with the hopes that that flywheel will keep turning for us. And it seems like it kind of is. We’re paired up with some—we’ve been very lucky. And again, at the end of the day, my good friend Ryan Moore will always say—which is totally self-deprecating and not true—but rather be lucky than good at times.
Dave Bradbury 40:05
True or false? Is it proven out that rural startups are more capital efficient?
Phil Beauregard 40:12
They have to be, yeah. Oh God, yeah. And you know what’s so funny is that, you know, believe it or not, one of the variables that some of the barbell—the large firms—look for is actually how high the burn rate is. They want people to spend money. And it makes sense. I mean, like, it means that they have a repeatable model in most cases. And, you know, like they can go through this—they could shovel more money at it.
Dave Bradbury 40:32
Yeah, it causes irrational things to happen. We’re experiencing—well, one of our companies has been, you know, force-fed a lot more money than they wanted. They took half of this huge number, and we’re forced to build things in advance of real, true demand. And, you know, you end up with infrastructure maybe that’s too big, or you have to—
Phil Beauregard 40:47
Think about the moral hazards. So, so we don’t go too far down this rabbit hole, but what is happening in the United States of America is, you know, obviously a mass transfer of wealth, right? Like at the end of the day—and I’m a participant in it, make no mistake—but the transfer of wealth: it’s just money sits at the top, and we have to shovel it somewhere because we’re getting paid fees for it. If we don’t make the money move all the way up from the pensions and the people that are working their butts off and giving money to their 401(k)s, and the people that are managing that money and then giving it to the barbell firms, right? And then they have to put that money to work. Otherwise they don’t get paid, and they don’t get to go buy their islands and participate in their fucking kleptocracies or whatever you want to call it, right? So then they have to give those to companies. And in order to move $100 million checks, you got to get entrepreneurs to spend money, and everything has to look that way. And then it so happens that that model works, because most of those companies that money is tossing into, you know, the flaming inferno of cash burn are going to fail, but some of them succeed, right? Some of them need that money, and those outcomes are so large that they make up for the rest. And then you get your 2x. Fuck that noise. I’m going to go back to kind of, let’s give entrepreneurs 2x what they really need or what they think they need in any given round. Let’s go be capital efficient, and let’s go create some fucking optionality for ourselves by either becoming profitable or leveling up to a point where it is undeniable that they can raise another round of financing. That’s what I’m interested in. And yeah, I mean, if you’re outside the cities again, you know, it’s not the scouts that are going to be practicing venture capital and the art of venture capital the way they do in San Francisco. Therefore, you know, it takes a little bit longer to get people to the next phase of downstream financing, and so they have to be more capital efficient.
Dave Bradbury 42:35
Okay, last question by me—is that okay, Nicole? All right, not the magic wand. Well, you can do that, but I give you a lot of credit for spending time up here in Vermont and doing a couple trips a year.
Phil Beauregard 42:47
It’s horrible. Yeah, it’s terrible here.
Dave Bradbury 42:49
Literally, you brought rain. We haven’t had rain in 17 weeks.
Phil Beauregard 42:53
I literally landed at the airport, walked outside, and it started raining.
Dave Bradbury 42:56
Yeah, so—and you’re such a big part of Boston’s ecosystem and perhaps these other cities you’re involved in. So any observations on what our little Vermont ecosystem looks like? Is it sufficiently credible? Is there some obvious gap or strength we’re not flexing enough? Damn it, Phil, what’s the answer?
Phil Beauregard 43:25
Yeah, first things first. I mean, it’s just one man’s opinion. But, like, I’m not in the business—believe it or not—I’m not in the business of wasting my time. You know, I’m at that stage in life where time is my most valuable commodity. And I think that you’re a beautiful man, and you guys are awesome, and you’re so fun, and your spirit is just like—you’re so pulsating towards me. But I’d probably rather be spending time with my wife and my kids. So the reason I’m here is because I think that the ecosystem is interesting. And the reason I’m here is because I think that there’s mithril in the mountain. And as far as gaps go, I would say that you just said, is there something we need to flex? I think you just need to flex. Like it’s all a matter of just—it’s a very unnatural thing for people from a place like Burlington or elsewhere to go out and yell from the hilltops how cool you are. I think it’s important.
Dave Bradbury 44:27
I love that about our place, but it’s frustrating sometimes.
Phil Beauregard 44:29
I really think it’s very important for people to do that, because that’s what gets attention, and that’s what gets dollars, and that’s what gets, you know, an ecosystem buzzing. That’s what gets people to move toward—like, if a tree falls in the forest and, you know, no one’s there, it doesn’t make a sound, right? You guys have trees falling all over the place here, literally.
Nicole Eaton 44:48
So good. So, so good.
Dave Bradbury 44:50
All right, we do have to wrap it up.
Nicole Eaton 44:52
Now it’s magic wand time. So the magic wand question is, what founder or leader, past or present, would you like to chat with?
Phil Beauregard 45:05
Wow, that’s a really good—that’s a really good question. Hmm. I think it would be super—this is gonna be so smart me. I think it would be super, super interesting to talk to—I have two, so that’s cheating right now off the top of my head. Sorry, they’re both male, but George Washington and Nelson Mandela would be two people that would be super, super awesome to talk to, specifically as it pertains to exactly what they’re going through at the moment and how they’re navigating through and what their true thoughts are, and kind of just listen to them riff. That’s it. Like I just want to hear kind of what they were thinking, yeah, you know, during that entire time, and what’s important to them. I think that that’s the coolest thing about human beings: really sitting down and just hearing what’s important to them and letting them tell stories. Because once somebody actually opens up and tells their intimate stories about just moments and what’s important to them right then and there or during a given time, I think that there’s just so much learning that I can do based off of that, and it informs my future behavior and experiences.
Nicole Eaton 46:20
All right, that’s so good. That’s so good.
Dave Bradbury 46:25
Phil, we got up at like 8 a.m. to do this view and respect you and thank you, right?
Phil Beauregard 46:32
I didn’t know this wasn’t a morning place, but I mean, you guys look great.
Dave Bradbury 46:36
The engineers are here like 7:15.
Phil Beauregard 46:39
You all look bright-eyed and bushy-tailed.
Dave Bradbury 46:41
I’m not. I’m gonna need to take a nap. All right, Phil, thank you so much. We appreciate it. And let’s keep doing this, Nicole, huh? Thank you.
This has been Start Here podcast, sharing the stories of active, aspiring, and accidental entrepreneurs. This series is brought to you by the Vermont Center for Emerging Technologies. Now let’s get back to work. You.
Transcribed by https://otter.ai
