13 min read

Pallet People: David Brillembourg

A conversation with David on his journey into VC and starting his own firm

Hello friends ūüĎč,

Welcome to the weekly edition of our newsletter.  The Pallet Post features conversations with awesomely insightful professionals, jobs from companies they recommend, and some of our own takeaways from building a startup.

Pallet People  is a deep dive into experiences: failures, successes, and everything in-between, of founders, directors, and high-level professionals.  At the top and bottom of each segment you'll see a guest-curated list of companies you can follow to track jobs from!

Today's guest is David Brillembourg, a young GP, managing partner @ Dune Ventures, and gaming enthusiast.  


The TL:DR

David's Opportunity

Once I got to Sam [General Partner @ Galaxy Interactive] ¬†it was all just hyper-focused into venture. ¬†Again, out of necessity. ¬†A lot of these things happen and they look really nice on LinkedIn as a step function, but it's actually people betting on you and necessity. ¬†Sam had raised a very large fund that he was managing on his own and needed people to be on the ground‚ÄĒ helping him with meetings, memos, thinking through decisions. Managing $300 million is a lot. ¬†His strategy was, let me take the youngest guy on the team and put him to work. ¬†And that was amazing for me. ¬†The amount of capital combined with the size of the team‚ÄĒ it's a pretty unique experience. Mainly, I got to learn a sense of how you start a venture fund from scratch, which is essentially what Sam did. ¬†That includes things like brand-building among founders and other investors, you're walking into a space where these things matter and we had to make it ourselves.

Investment Philosophy

A couple things, first‚ÄĒ there's de-risking a business, then there's diversification. People commonly talk about diversification in the context of portfolio risk, which is important. ¬†But the problem with diversification is that it's been taken to a new extreme by some portfolio managers. ¬†Diversification is the enemy of upside. ¬†It's a sign that a money manager doesn't actually know how to create upside. ¬†They don't have an edge in the investments they make, when I hear a venture fund talking about a collection of sub 1-3% bets in a portfolio, it's going to be really hard to have a top performing fund without those big bets. ¬†It's not a manager putting in high conviction bets into companies they genuinely think will succeed. I think the best funds are doubling down with big bets on their winners. My job, as an investor, is to create edge by having deeper understanding of businesses, having deep relationships with founders, and hopefully helping them scale with capital.

Backing Founders

My only mandate is to back great founders in the space.  Everything else is noise. There are investors that really care about their thesis, investing in an attempt to self-actualize what they believe about the world, and none of that matters to me. I'm a reactive investor.  I look for really special founders that have really strong visions for how the world looks and I follow that.  Always.

Dune Venture's List

We've created a list of Dune's portfolio companies.  If you're interested in gaming, follow for a curated-feed of jobs!

Curate your job search | Pallet
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Breaking Into VC


Breaking Into VC

I'll walk you through the beginning.  Basically it all started with a party in 2017.

Classic VC.

Exactly, so yeah I got invited into a party that Michael Novogratz (former CIO of Fortress) was hosting at his offices for a brand new company called Galaxy Digital. His plan was to spin up a group focused on digital assets and technology.  More specifically, he had massive holdings in Bitcoin and ETH, so his focus was really building the Goldman Sachs of that space.  Long story short, I was lucky enough to be at that party and have the chance to converse with some of the co-founders.  I spoke fast and impressed enough to be extended an offer for an internship.  From there I worked my ass off for 10 months until I convinced them it would be best if I dropped out of school to work full-time.

But at that point you weren't working at the VC arm of the company yet?

Right about that same time I dropped out of NYU to work for Galaxy, a guy named Sam Englebardt, who spent over a decade in entertainment and media, and now had co-founded Galaxy with Mike‚ÄĒ he raised a venture fund that focused on technology and specifically entertainment. ¬†So he recruited me to be the first employee of that fund, which is now called Galaxy Interactive. ¬†It's one of the biggest entertainment-focused funds out there.

Was it exciting to be on the ground floor of something like that?

Absolutely, I was really lucky to work directly with Sam, who I think is one of the best investors at this intersection.  I just tried to soak it in, learn all I could about venture, and I did that for about two and a half years.

What happened next?

In early 2020, again, I was very lucky and having conversations with a group of incrediblly smart and talented people.  Some of them were looking for exposure into the games space and the broader interactive entertainment industry.  So they backed me in building Dune Ventures, and essentially agreed with my strategy for early stage venture in the space.

For those of us who are less familiar with how VC firms operate, do you try and recruit yourself on the team? Sounds like you sort of hustled your way into it.

Its interesting because I spent close to a year working on the more operational side at Galaxy, I actually have it listed as jack-of-all-trades on my Linkedin because thats what it was.  I was one of the first salespeople, I spent time on the research team, worked a little in traditional investing.  Back then, Galaxy was only five employees, it was a far-cry from the publicly traded company it is now.  So that company's matured pretty significantly over the last three to four years, and I got to see some of that growth first-hand.  But out of necessity, I was working on multiple different business units until Sam took me to the venture side.  It wasn't until then that I spent 100 percent of my time in venture.

What we're the advantages of working in an environment where you can spend your time on a variety of different teams? It kind of mirrors a sort of educational approach.

Yeah it was pretty unique. ¬†What you get hired for is usually what you do. ¬†Mike's vision for the company was quite overarching, which was somewhat responsible for my ability to jump into so many different business units. ¬†And along the way I was able to work with some amazing people: David Namdar who was running trading, Yoshi who was heading sales, Ivan Brightly, he was one of the OG crypto guys who ran the research team. ¬†I got to spend time with really really impressive people, several hours a day or week with each one of them‚ÄĒ and that gave me some grounding skills that are helpful from the venture perspective.

Sounds like amazing exposure.

Once I got to Sam it was all just hyper-focused into venture. ¬†Again, out of necessity. ¬†A lot of these things happen and they look really nice on LinkedIn as a step function, but its actually people betting on you and necessity. ¬†Sam had raised a very large fund that he was managing on his own and needed people to be on the ground‚ÄĒ helping him with meetings, memos, thinking through decisions. Managing $300 million is a lot. ¬†His strategy was, let me take the youngest guy on the team and put him to work. ¬†And that was amazing for me. ¬†The amount of capital combined with the size of the team ‚ÄĒ it's a pretty unique experience. Mainly, I got to learn a sense of how you start a venture fund from scratch, which is essentially what Sam did. ¬†That includes things like brand-building among founders and other investors, you're walking into a space where these things matter and we had to make it ourselves.

How important was the brand-building process to the success of the fund?

Very important.  Leading certain rounds, convincing founders why you're the right partner, building and adding value, expertise, all these different elements have become increasingly important in a world where capital is a commodity.  Sam, and eventually Richard Kim who's now one of the newer GPs and a good friend, did an excellent job differentiating.

Were you ever daunted being on just a two person team?

Well, Sam is such a great partner and mentor that he really gives you the ability to weigh in on conversations and gives you a significant amount of feedback. Important to have those people in your career.

Dune's Thesis


So you briefly mentioned that during your switch to Dune Ventures they backed your very specific belief you had about investing in early stage gaming companies, what was that take?

I wanna preface this answer by saying that my thinking on venture has evolved pretty drastically over time in terms of skillset and style. ¬†My style has only gotten more specific as I invest. ¬†But the biggest thing was really taking stock of the space, looking at funds in both the gaming and traditional venture sectors, and carving out a niche. ¬†I realized that the type of investor that was lacking was really high conviction. ¬†You'll realize after spending time with other investors and just being in the space is that conviction is actually a scarce resource. ¬†Most investors aren't willing to put massive skin in the game from a portfolio perspective into a specific company. ¬†As humans, we tend to look at numbers on TechCrunch releases and say "wow, x fund invested $20 or $30 million, that's a huge round" but that's not the right outlook. ¬†You should be asking yourself ‚ÄĒ what percentage of a portfolio is that check size? When XYZ crossover fund is leading a $50 million round that's actually a very small part of their portfolio. ¬†So conviction is lacking in most venture funds and conviction is defined as the % concentration of a company in a portfolio. ¬†So when I started, I wanted to take this different approach than I had seen previously, especially in the entertainment space, making very few bets a year, highly concentrated bets, placing Dune in really high conviction positions in the space.

What does Dune's portfolio look like right now?

We've made seven investments in the last year. ¬†In the next 12 months we'll probably make closer to five or six investments. ¬†So we're making way less investments than a traditional fund, and definitely most of the venture funds in gaming. ¬†I think some gaming funds are doing 20 to 30 a year, which is a part of their model and I think will work really well for them. ¬†But my model is different‚ÄĒ just a few positions a year, really high conviction, and huge belief in each company. ¬†So that was the first thesis.

What's the second thesis?

The second thesis is that the truly great companies in this space will take time.  When you think of who's leading the space, Epic Games, Roblox, Unity, they've all been built on multi-decade timelines.  Epic is 20+ years, Unity and Roblox closer to 15, so what we're seeing is that the most interesting companies, the ones that are the most anti-fragile, are building over time.  I wanted to create a vehicle that could enable me to invest in these companies over longer periods of time than a traditional venture fund.  You usually have about a ten year span to return capital to LPs, which limits the upside you can receive from investments, especially if a company will take longer to mature.  I wanted to hold positions over 10 or 20 years.  From seed all the way to post IPO if possible.  I'm applying a structure that's more akin to a holding company.  So that's the second-thesis.

Is there a third-thesis?

The third thesis is probably the most simple‚ÄĒ we want to double down over time. What I tell founders is that our first check is usually going to be our smallest check. We did a $2 million check into a series B company and we're hoping to do $10-15 million in their series C. ¬†As the company evolves, our model allows us to put more money in. ¬†As a holdco vehicle, we invest off of a balance sheet, so increasing positions over time is a huge part of our strategy. ¬†The other advantage of the concentration is our ability to build super strong relationships with founders and spend serious time understanding their businesses.

Appreciate the full picture, so an opinion from someone whose somewhat less familiar with VC‚ÄĒ in my mind the classic reason that VCs are "low conviction" is because they make their returns off just a handful of big winners. ¬†So how do you de-risk with such a low volume of investments? Is your diligence just next-level?

A couple things, first‚ÄĒ there's de-risking a business, then there's diversification. People commonly talk about diversification in the context of portfolio risk, which is important. ¬†But the problem with diversification is that it's been taken to a new extreme by some portfolio managers. ¬†Diversification is the enemy of upside. ¬†It's a sign that a money manager doesn't actually know how to create upside. ¬†They don't have an edge in the investments they make, when I hear a venture fund talking about a collection of sub 1-3% bets in a portfolio, it's going to be really hard to have a top performing fund without those big bets. ¬†It's not a manager putting in high conviction bets into companies they genuinely think will succeed. I think the best funds are doubling down with big bets on their winners. My job, as an investor, is to create edge by having deeper understanding of businesses, having deep relationships with founders, and hopefully helping them scale with capital.

So you start with smaller checks so you can de-risk the portfolio by allowing yourself room to de-risk the company with future capital? Am I getting that right?

Exactly.

"But once you’re in the business of evaluating businesses, and you decide that you’re going to bring the effort and intensity and time involved to get that job done, then I think that diversification is a terrible mistake… If you really know businesses, you probably shouldn’t know more than six of them, I mean if you can identify six wonderful businesses, that is all the diversification you need and you’re gonna make a lot of money and I will guarantee you that going into a seventh one, instead of putting more money into your first, has gotta be, a terrible mistake."

** After our interview, I came across a small and random excerpt of a young Warren Buffett reflecting Dune's thesis

Thoughts on the VC Landscape


What's your take on the classic "value-add VC"? Every VC seems to be saying "we're great because of X" and that thing is never capital.  It can be differentiated networks, hiring help, or anything in between.

I have some thoughts on this topic.  Obviously we offer longer-term commitment which I'd say is somewhat rare (especially among seed-focused funds), but I tend to think that investors who are obsessed with selling founders on value-add can be overrated.  And I don't really see that as a diss, I just believe that these services are really marketing tools to get deals, not actually helping companies.  It's a way to create funnel.

Is there room for VCs to innovate on their services?

Definitely areas of innovation to happen in venture that can massively benefit founders.  I'm a huge fan of platform teams.  I think having people that specialize in hiring or design, actually instituting a post-investment service, is a direction I believe in.  Expertise is extremely helpful.  But the proof is in the pudding.  When you're talking to a venture fund, you should always get a reference from other founders in their portfolios.  How helpful are they really? In most cases, they're not.  But in some cases, they're game-changers for companies.

Is expertise going to be a huge differentiator moving forwards?

To me the differentiator is really about support.  When you need capital, are your investors going to be there for you? In most cases, the answer is actually no.  What you really want in your corner, on your cap table, is someone who can double down over time and write checks over long periods.  That's what actually matters.  It's really easy, in a bull market, to talk about value add and services and all these different things when capital's flowing.  But when things are really tough, will they still back you? So for me, the most important thing to know about a venture fund, if you're a prospective founder, is not the current check size, but how much money is allocated for future rounds and what their track record is backing portfolio founders (in both good and bad times).

Ultimately, whats the job of an investor?

After investing, the main job of an investor is to do absolutely no harm. That might sound obvious, but I think there are a lot of investors who would do well in first avoiding harm before they start thinking about adding value to companies.

Out of pure curiosity, as a gaming investor whats your take on AR / VR? My co-founders and I have heated debates about it.

First we should talk about them as two different things. ¬†VR has a very interesting journey from a venture perspective. ¬†The core thing to understand is that a lot of people got burned in that 2016-17 timeframe. ¬†Something we haven't really touched on is trends. Trends are usually overrated. Same with the buzzwords associated with those trends. VR was definitely a trend / buzzword so things got overcapitalized way too early from an adoption perspective, which is kind of an equivalent to crypto in that same timeframe. ¬†We can look at the data but I believe that 2020 was one of the worst years for VR investments. ¬†So what we understand now is that the room temp on VR has shifted significantly from hot to cold, and all-the-sudden its become a fairly under-invested sector. ¬†No one wants to touch VR. The real question to me‚ÄĒ is there an opportunity to back undervalued, great companies that are building at the horizon of what is objectively a very exciting new technology platform. ¬†I don't personally know if it's going to be in the content layer, the hardware layer, but what gets me excited is how invested large companies like Facebook are, pushing Oculus and huge amounts of research. ¬†It looks like in 3-5 years headset tech is going to be really exciting. ¬†All that being said, I'm by no means a VR expert.

Is Dune in VR?

We haven't made it to VR yet, but there are some studios I'm excited about.  And on the AR side, companies like Niantic have leveraged AR to build multi-billion dollar franchises like PokemonGO.  But it's still fairly early.  AR has an interesting adoption story because of Apple and Google pushing it on phones.  Most phones have AR capabilities.  Companies like Snapchat are pushing it from a software perspective, AR filters, which have massive engagement.  AR as a surface to create innovative products is definitely interesting.  The high-level summary is that I wouldn't be surprised to see these products thriving in three to five years.

Are there spaces within gaming you have no interest in?

Definitely not.  I know there are certain funds that only back platforms, or infrastructure, but we really invest in everything.  My only mandate is to back great founders in the space.  Everything else is noise.  There are investors that really care about their thesis, investing in an attempt to self-actualize what they believe about the world, and none of that matters to me.  I'm a reactive investor.  I look for really special founders that have really strong visions for how the world looks and I follow that.  Always.

Dune's List


Curate your job search | Pallet
Pallet brings curation to your job search, so you see the jobs that count.