Hiring Circle meets Jamie Beaumont, Managing Partner at Lego Ventures
Jamie shares insights into how his early career in accounting, M&A and corporate finance advisory provided a solid training ground upon which he built his career, and what led him to his current role as Managing Partner at LEGO Ventures. He also provides a fascinating glimpse at life behind the scenes at LEGO Ventures and some great advice for anyone wishing to pursue a career in venture capital.
Tell me more about LEGO Ventures and how it fits into the LEGO® Brand Group.
LEGO®’s businesses remain privately owned by the owner family that founded the business in 1932. The LEGO® Brand Group includes entities such as the LEGO Group, LEGO Education and LEGO Foundation, and on top of all that is KIRKBI – the family office that owns all of those entities. LEGO Ventures was founded in 2018 and actually sits within KIRKIBI, not within the LEGO® Group, and is entirely funded by KIRKBI – they are effectively the only LP but without all the formal fund documents – it’s more of long-term ambition from the family.
Does having fewer investors to answer to mean you have more flexibility in terms of what you can invest in?
No, actually quite the opposite. We have given a huge amount of consideration to our investment strategy. LEGO® is the world’s most trusted brand. It is derived from two Danish words that mean “play well”. This has grown into the idea of “learning through play”, which sits at the core of what we do. The LEGO® brick and LEGO® system in play is only one, albeit highly successful, articulation of that idea. Our challenge at LEGO Ventures is how to build on that overall success, to take that vision and invest in future iterations of the LEGO® brand to be a force for learning through play, which is essentially what we stand for.
There are two areas that we invest in predominantly. First is education. This is something we care deeply about and includes both how people learn as well as what they learn. It’s the idea of making learning actively engaging, fun, joyful and meaningful. We care about skill education more than knowledge acquisition so we focus on creativity, collaboration, critical thinking and communication.
"Our challenge at LEGO Ventures is how to build on that overall success, to take that vision and invest in future iterations of the LEGO® brand to be a force for learning through play, which is essentially what we stand for".
Second is the expression of the LEGO® idea through digital play. Historic examples of this might be Minecraft – it’s the closest articulation of the LEGO® idea of “brick building creativity” in digital form – and Roblox. There is a whole wealth of evolution and change coming in the digital play environment involving not just creativity but critical thinking, social connectivity and collaboration, so we are very much exploring those kinds of concepts.
What is the team structure at LEGO Ventures and what are their roles?
We have three main teams. Firstly, we have the Investment team who source and diligence the investments. Secondly, we have the Value creation or platform team. They work with the investments once we own in them and link them into the LEGO® ecosystem. Finally, we have the Incubation Studio. This is where we come up with our own ideas and run with them to see if they’ve got life. There's a whole funnel of activity that happens here; from doing market research to identifying gaps in the market, doing further research to fully understand if it’s a pain point that someone will pay for and then through to the validation hypothesis. Finally, if all that looks good then you start moving into a phase when you build an MVP.
So how do you source new investments? Do you invest in external ideas or are all your ideas grown through the Incubation Studio?
Most of what we do is investing in other people’s ideas and other businesses but obviously we do have the function to generate our own. For example, “Caper” came through the Incubation Studio but “OK Play” is a case where we invested in someone else’s idea externally.
In the case of sourcing external ideas, some are introduced to us by people in the investing world, but for the most part it’s about building a network and presence and following market intelligence. For example, if we know of a business that has done a fund-raising, then we might start tracking that company then reach out to find out when their next fundraising round is. We will review then meet those that resonate most with us.
The function of our Incubation Studio is to reduce the time and cost associated with failing. Most of the ideas won’t work or come to fruition. In a corporate environment its quite easy to sink a lot of people’s time simply during the process of simply agreeing that it’s an idea we should research. But in an Incubation Studio you can do all of this within a week and if it’s something you don’t want to do then you move on.
Once you have invested, what is the journey for those businesses and what’s your role?
We might take a board seat, so I sit on the board of one company, and provide support from there. We also support them by thinking about their financial strategy, about how they structure organisational growth, how they grow market share and how they gain traction. We can then match them with expertise from inside LEGO®.
As an example, we’ve connected one of our portfolio companies to help them build their pedagogical method in a way that is clear and structured and can be communicated to the outside world. Another company we have helped with articulation of the brand in a way that appeals to parents and kids as we’ve got lots of experience there. There are lots of areas we can help.
For the Incubation Studio, once we fund the build we are committing to around 6 months-worth of capital to build the MVP. But we only get to that point with about 1 in 5 ideas that we come up with. Personally, I am a point of sparring and challenge with the Incubation Studio in the run up to pitching and whether we will fund the build. My role is in challenging the decision-making process to ensure we are being rigorous in our assessment and ‘killing’ ideas quickly that stand a lower likelihood of success based on the evidence.
Do you have a favourite deal you’ve worked on?
Not really – each one is interesting for its own reasons. I joined mid-2019 when LEGO VC was quite young so I've been here from the beginning of about 2/3 of the companies we have invested in.
"...for me it’s enjoying the journey of the company rather than enjoying the deal itself. I am excited to see how companies evolve, develop and succeed"
As a whole we’ve not been around long enough to have seen a deal throughout its full lifecycle, but for me it’s enjoying the journey of the company rather than enjoying the deal itself. I am excited to see how companies evolve, develop and succeed.
What kinds of personalities does a career in Venture Capital suit?
There are different investor funds that suit different personalities. Some are very “eat what you kill” and ego driven environments, others are more mission driven, some are more financial driven. I think you need to match what you are and who you are with the personality of where you are going. If you are driven by being top dog and being rewarded on your own performance then you need to find a venture fund that supports that structure and personality.
"There are different investor funds that suit different personalities...I think you need to match what you are and who you are with the personality of where you are going"
If you want to work more as part of a team, go somewhere that is more collaborative in its decision making and rewards on overall performance of the investment portfolio rather than the investments you make. For us we need to gel and mesh with the wider LEGO® culture. In ventures you are always learning as you are at the leading edge of innovation and you’ve got to know your market place. It helps to care about what you are investing in and have a genuine desire to know about the market.
So what is the culture like at LEGO Ventures?
We are very open here and we talk about work terms like bravery, curiosity and focus as values around how we operate. It’s a very people-orientated culture as you might expect from a business like LEGO® – that integrity is very important. So meshing that environment and understanding the strategy and approach of the business and being able to fit into that is important. And there’s only a subset of people who are capable of being both successful investors and working with our culture.
What do you think makes a successful investor?
Well, in the end we could be involved with these businesses for 5-10 years and over that time we can expect somewhere between 50% and 2/3 of these investments to fail. Our job is not to support failing businesses - our job is to accelerate and give unique advantage and focus to the businesses that have the greatest ability of succeeding. You can’t take sunk cost thinking into investing. The worst thing you could do as an investor is to try and salvage a company because you already have money in it.
"Our job is not to support failing businesses...knowing when to stop is fundamental to being a good investor"
These are extremely hard decisions to make especially when you have built a relationship with an entrepreneur as you want to back them 100%. It’s hard to turn around and say “we can see you are running out of capital, but if you need further investment you are going to have to find somewhere else”. But knowing when to stop is fundamental to being a good investor
Do you recruit graduates at LEGO Ventures or is it important to bring people in with more experience?
On the investment side we recruit from MBA level upwards or post-Analyst role. You need to have that grounding in order to move into our investment team as we don’t have the band-width to train graduates. When you go into an investment banking or an accounting firm as a graduate, there are structures in place to provide that education. But with team of 6 or 7 investors globally we don’t have that ability to bring someone in and teach the most junior person – we need people who can hit the ground running from day one.
In terms of your early career and training, the path you followed might be described as fairly predictable, having moving from Oxford, to PWC, to UBS then Hawkpoint. But then your path followed various different directions. Tell me more about that journey.
My 20’s were about experience, skill acquisition and CV building because a degree doesn’t equip you to be good at work. My decisions behind moving to PWC and UBS were based on the fact that you can’t really go wrong with an accounting qualification or a bulge bracket bank on your CV and it was certainly a great place to build a reputation.
It’s really interesting because my school friends and I had a 10-year reunion in our 20’s – everyone there was a banker, a lawyer, a doctor or a consultant. That was it. And then when I look now another 10 years on, we are all doing a whole range of things. Once you’ve built that base you can start thinking about opportunities. For example, the biggest change I've made in my career was moving from being an Investment Banker to being a CFO. It was a risk but at that point in my career I was able to be willing and open to other things; it was less about my experience and more about backing my abilities.
Did you have a plan for your career and what lessons have you learnt about making career decisions?
I never had a defined career plan but what I did do was based on a few key things. Firstly, I've learnt that in recruitment processes there’s always a list of 5 or 6 requirements – have you done x, y or z before? Do you have experience in PE / Mid-market / International / a particular sector? I always think if that tick list exists and you tick 6/6 you are not really progressing. If you tick 5/6 you will get some learning and stand a good chance of succeeding. If you tick 4/6 you will back your ability but you will learn more. If it’s 3/6 you are probably setting yourself up to fail. It’s a case of imagining yourself on that spectrum and asking yourself - do you want to be challenged? And it’s relevant when you are hiring too; when you recruit you can either recruit experience and be safe or recruit ability and take a bit of a risk. I've always backed my ability and relied less on my experience.
"...It’s a case of imagining yourself on that spectrum and asking yourself - do you want to be challenged?"
Another lesson I've learnt is to always ask myself more questions about elements outside of the role itself; do I feel like this organisation needs me? Can I contribute? How do I want to contribute? Do I like the culture? Will I gain something from it? It’s that line of questioning that has governed my decision-making process. With every job you find out what makes you happy – what size, what age of company, what type of CEO do I work with the best, what products and services do I have a passion for and what aspects of the role are really important to me and what can I take or leave – you start to build up that picture of yourself over time to get to that next level of detail.
Finally, I always find it's useful to look at the senior people in your team and think “do I want to be doing that in 20 years’ time?”. The moment I saw my learning curve starting to plateau I found it was really important to tell people I wanted a new challenge. It’s amazing how many opportunities surface from those conversations. I got my job at LEGO Ventures following lunch with a friend who put me in touch with someone they knew and the rest is history – I didn’t even know there was a job on offer, but here I am. They say it’s not what you know it’s who you know, but I’d say it’s very much both.