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Sergio Paluch of Beta Boom: “Fiveable House”

Beta Boom is a bit unique in that we look for very different factors than most venture capital firms, and our evaluation process mirrors what is important to us. Of course, we look at factors such as the potential market opportunity, defensibility, and traction, but that’s where the parallels to other funds typically end. As […]

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Beta Boom is a bit unique in that we look for very different factors than most venture capital firms, and our evaluation process mirrors what is important to us. Of course, we look at factors such as the potential market opportunity, defensibility, and traction, but that’s where the parallels to other funds typically end.


As part of our series about “5 Things I Need To See Before Making A VC Investment”, I had the pleasure of interviewing Sergio Paluch, a Founding Partner of Beta Boom, a pre-seed fund that invests in startups serving the New Majority.

Prior to Beta Boom, Sergio founded a Silicon Valley innovation firm where he led over 50 product innovation projects for high-profile clients including Google and Fair Trade USA, and he co-founded an award-winning platform for low-income communities, AtmaGo, which has served more than 5M users.

Sergio holds a dual B.A. in Physics and Economics from Dartmouth College and M.A. in Global Development Economics from Boston University.


Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

Beta Boom is based on two simple beliefs. First, those people that face the greatest adversity tend to be the most inventive and persevering, which are paramount traits to successful entrepreneurship. Second, in order to make the next generation of tech entrepreneurs more successful, we need a new investment model that actively bridges access gaps and better meets their unique needs. These two principles are a result of my personal history as an immigrant and my professional experience as a founder and product leader working in Silicon Valley for over a decade.

When my parents and I immigrated to the United States, we settled in Chelsea, Massachusetts, which was the heroin importing capital of the East Coast during the late 80s. Chelsea was a very rough place to grow up. It was rampant with gang warfare and crime. One of my most vivid memories during that time was leaning out of our second-story window after returning from school in third grade and witnessing a full-on machine gun shoot-out on my street corner where gang members would sell drugs, right in front of the local elementary school. It was that kind of town.

Yet despite the turmoil and despair, I saw that the people in my community were brilliant. Like my family, they were living in Chelsea due to certain circumstances and not because they lacked intellect or drive. My neighbors and my friends and their parents were some of the most resilient, clever, and intelligent people that I had ever met in my life. Unfortunately, many were not able to fulfill their potential because despite what politicians and movies would have us believe, the cards are stacked against many of us because of our economic situation, immigrant status, skin color, and zip code. This is a horrendous loss to society.

Perhaps due to guilt or idealism or both, I’ve always longed to even the playing field and give brilliant, resilient future stars like my friends in Chelsea a fair shot at fulfilling their potential.

But my professional career has also taught me that showing people how to do things matters a lot more than telling them what to do. This critical insight is what made Beta Boom possible because many of the founders that we meet face access gaps to knowledge and operational expertise and need support figuring out how to complete many of things required when being a founder.

The majority of my job as an investor is coaching founders and helping them build internal capacity as a team by adopting practices and systems and recruiting experts and team members that can help them grow. Coaching, training, recruiting, and building internal capacity is what I did for more than a decade as an innovation consultant in Silicon Valley. My career armed me with both the key insight and years of experience in building teams and helping them succeed through coaching.

Beta Boom is the result of the beliefs that I developed as an immigrant and the key insights and skills that I garnered over a decade of leading innovation projects in Silicon Valley.

Can you share a story with us about the most humorous mistake you made when you were first starting? What lesson or take-away did you learn from that?

Beta Boom started as an accelerator in 2018, and a big feature of most accelerators is bringing the founders together in person for a period of time, usually three months. We blindly followed this pattern with our first round of investments and asked our teams to relocate to Utah. Moreover, we brought the teams together in a house that we rented in the deep suburbs of Utah County, which is predominantly white, Mormon, and conservative.

So there we had Black and mixed race founders coming from liberal and multicultural places like Oakland, California and Houston, Texas to live in the thick of Utah County in a suburban neighborhood with hardly any nightlife or anyone that looked like them. Our founders were miserable.

That was the exact thing that made us throw out the entire accelerator model and rethink everything from forcing founders to relocate to demo days. We realized that in order to better serve the needs of our founders and to better support them, we needed to reinvent everything that early stage venture capital investors were doing.

Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?

My first job after college was working at Google on the AdSense team. I adored my coworkers but loathed the work. I had gone from studying quantum computing to sending canned customer support emails and using maybe 2% of my brain capacity. So I applied for junior product manager positions and junior product marketing positions with no success, so I left.

It was one of the greatest decisions I made in my career. Everyone wanted to work at Google, but I chose a more challenging and unknown path instead, founding my first company less than two years after I told Google bye-bye.

I was forced to be more inventive and hustle harder to build a career as a user-centered innovation leader — an area with which I had no previous experience. Because I was so young, I had to work a lot harder to prove myself to clients. And while my contemporaries were designing based on intuition and what looked “good,” I based my product design on statistics and academic research on user behavior. Despite having just a year of experience, clients chose to work with me over seasoned experts because my product designs garnered stronger results.

Through this experience I learned to never sell myself short and take risks because the most rewarding path in life is the one that we make for ourselves.

None of us are able to achieve success without some help along the way. Is there a particular person or mentor to whom you are grateful who helped get you to where you are? Can you share a story about that?

While I haven’t had one sole mentor, I have gained many small insights from the many people I’ve come in contact with throughout my everyday life. I’ve learned from teammates that I managed, my bosses, and founders that I’ve coached. Just the other day, I was on a call to advise a founder, but she’s the one that imparted the bigger breakthrough on me probably without realizing it. She said that the best question to ask oneself in determining your startup’s positioning is, “What do we do better than anyone else in the world?” I’ve developed my own frameworks on this but never thought of positioning in this simple, elegant way.

No one person has all the answers. No one mentor will tell you the right things to do. No one guru will impart the silver bullet through a keynote speech or book. The one thing that I’m certain about is that every founder has a unique journey that only they can navigate, and the best way to find one’s ideal path is to soak in all the learnings possible. You never know when a simple comment from the least likely source will be the key inspiration that you need to build something groundbreaking.

You have been blessed with great success in a career path that many have attempted, but eventually gave up on. Do you have any words of advice for others who may want to embark on this career path but are afraid of the prospect of failure?

One of my best friends in high school, Adrian, told me something that has been a north star for me. He said, “The only person you have to impress is yourself.”

The notion of success is relative, not absolute. Some might see your journey as a success while others might judge it as a failure. None of their opinions matter.

I recently listened to an interview with Marcus Whitney, who said that rather than telling himself that he wants to be a software engineer, he simply told himself that he already was one. I love this perspective! Rather than worrying about how to become a programmer, Marcus did all the things that software engineers do. He learned new coding languages, built products, went to engineering meetups, etc. He was a novice programmer at first, but by doing all those things that seasoned engineers do, he became a skilled programmer.

How others evaluate you is completely immaterial, so my advice would be to simply do the thing you know you’re meant to do and always work to impress yourself.

Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?

Beta Boom exists because we think that capital alone is not enough to unlock the 4.4 trillion dollars potential that women and multicultural founders bring to the table. We’ve seen this to be anecdotally born out in the numbers: the number of women- and diversity-focused funds has ballooned, but the rate of investment in women and founders of color has barely budged. Our own research has shown that ecosystems that are flush with cash fail to get a commensurate number of startups led by women and founders of color to even the seed stage. Meanwhile, other ecosystems like Charlotte, North Carolina rank among the bottom in terms of venture capital investors backing diverse founders but are the top ecosystem in terms of the proportion of seed-stage startups led by underrepresented founders.

More than anything, I believe that what needs to change is this mindset that throwing money at the problem will fix it. Academic research and study after study have shown that social and human capital have a much greater impact on startup success than cash alone, which has no correlation according to one frequently cited study (“On growth drivers of high-tech start-ups: Exploring the role of founders’ human capital and venture capital” by Massimo G. Colombo and Luca Grilli). As a society and industry, I would love for us to consider novel ways in which we can invest social and human capital in underrepresented founders from the idea stage all the way through exit.

You are a VC who is focused on investments that are making a positive social impact. Can you share with us a bit about the projects and companies you have focused on, and look to focus on in the future?

I truly believe that we innovate for what we know, and so many of the founders that we back innovate for underserved customer segments. These innovations almost always have clear social impact, like democratizing access to Advanced Placement success, making it easier for small businesses to drive repeat business, and ensuring continuity of care for disenfranchised patients, who are often people of color.

It is well documented that the biggest gaps in the tech industry exist in the finance and healthcare verticals, where women and people of color have been overlooked by both innovators and venture capitalists. As luck would have it, these are the two areas that my partner and I have most experience in leading innovation projects and building teams. While these are our core focus areas, Beta Boom invests broadly in software startups that serve the needs of women and the New Majority.

What you are doing is not very common. Was there an “Aha Moment” that made you decide that you were going to focus on social impact investing? Can you share the story with us?

I remember reading about a smart lock startup that raised a ludicrous amount of money. The article lauded how this 700 dollars smart lock can be operated from an iPhone app, so you can let your housekeeper in if she (female, of course) forgot her keys. I just remember reflecting and realizing that I can’t think of a single person in my entire extended family that would ever need a 700 dollars smart lock like this or be able to afford it. That’s when I knew that I was living in an elite innovation bubble called Silicon Valley that was unlike the rest of society.

My family and most of my friends don’t need AI-powered juicers, dog dating apps, or 700 dollars smart locks. In fact, most investors and founders in Silicon Valley and other tech hubs were neglecting huge parts of our society. It made perfect sense because innovators usually innovate for what they know, and if innovators are largely from one tiny sub-segment of society, how can they build products to meet the needs of those that come from different backgrounds and have different needs than their own?

That was the day when I realized that I was going to leave this bubble and focus on helping a greater diversity of tech entrepreneurs bring their ideas to life and to mass-market.

Can you share a story with us about your most successful Angel or VC investment? Or an investment that you are most proud of? What was its lesson?

Without a doubt, Beta Boom’s portfolio company Fiveable is the perfect archetype of the founders and startups that we think are the biggest opportunity of our lifetime. Fiveable is led by Amanda DoAmaral, who was an Advanced Placement (AP) teacher that taught at a low-income high school in Oakland, California. Amanda embodies all the qualities and traits that we look for in founders: expertise in their problem space gained from personal experience, obsession with the problem, passion and perseverance, inventiveness, and focus and execution.

When Amanda took over teaching AP History, the students’ pass rate hovered in the teens. Five years later, more than seventy percent of her students passed their AP History exam. Amanda was an expert on helping students prepare for and pass the exam.

After she left the classroom and moved back to her childhood home in Maine, Amanda’s ex-students started reaching out to her to tutor them remotely. In a short period of time and without formal technical training, Amanda was able to cobble together a social learning platform from available solutions and was already serving over four hundred students when she applied to Beta Boom. She clearly had the drive, resourcefulness, focus and execution that we seek in founders.

During our post-investment academy, where we support and coach our founders, she also showed that she was fully focused on what the students needed. This was the final key that Amanda needed for Fiveable to take off growing from 421 students to more than 3 million that studied with Fiveable less than three years later. Fiveable has since raise more than 3.9M dollars in seed funding from investors such as SoGal, BBG, and Matchstick Ventures and has investors chomping at the bits to get into Fiveable’s next round.

This was all the proof that we needed to show that our thesis was right. Amanda does not fit the old Silicon Valley model at all. She didn’t work in tech, she was a school teacher. She didn’t graduate from Stanford with a CS degree. She’s a multiracial woman running and growing Fiveable in Milwaukee, not Menlo Park. And she’s successful, not despite these factors, but because of them, and all she needed was some partners like us to spark Fiveable’s growth.

Can you share a story of an Angel or VC funding failure of yours? What was its lesson?

Our biggest failure when we started making investments through Beta Boom was that we lacked a sufficiently big network of vetted and diversity-focused downstream investors. It was rather pointless putting our startups in front of investors that had almost nothing in common with our founders and didn’t really believe that they could build world-class companies because they didn’t fit the old-school Silicon Valley pattern matching. What mattered most was not the quantity of investors in our network but the fit to our founders. In sales terms, they were the wrong customer.

Growing our network of investors that have a proven track record of investing in women and people of color has been our priority since, and we’ve more than quadrupled our network of vetted investors over the past two years.

Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?

We’ve been lucky that we have not yet turned down a company that later became a run-away success. If anything, we’ve had the converse problem. Our pilot fund was seeded with our own capital, and consequently, we were not able to make big investments. We lost a number of startups to other pre-seed funds or accelerators simply because they wrote the bigger check. What heartens us and lets us know that we’re onto something big is when those startups later reach back out to Beta Boom asking us to invest and help them grow — sometimes offering to cut their valuation by half just to get support and coaching from Beta Boom’s team.

Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why? Please share a story or example for each.

Beta Boom is a bit unique in that we look for very different factors than most venture capital firms, and our evaluation process mirrors what is important to us. Of course, we look at factors such as the potential market opportunity, defensibility, and traction, but that’s where the parallels to other funds typically end.

We don’t care if the founders worked for Google or Skyline High School, went to state school or Stanford, or belong to a country club. We have found that markers of pedigree and privilege are terrible predictors for success, and we’re not alone in this conviction. Top tech companies from Apple to Google no longer hire based on which college applicants attended because those superficial markers have no correlation with actual performance.

Instead, we at Beta Boom are laser-focused on the following, factors that I would urge others to ask before making their own investments:

  • Do the founders have unparalleled experience with and insight into the problem they are solving?
  • Are they obsessed with their customers’ needs?
  • Do they have exceptional passion and perseverance?
  • Can they demonstrate outstanding focus and execution?
  • Have they shown incredible resourcefulness and inventiveness in overcoming obstacles?

Last year, Beta Boom invested in Nodat, which is a marketing platform for small businesses allowing them to turn their customers into an army of nano-influencers. Nodat was founded by Aireka Harvell, who is a true expert on the marketing needs of small businesses. Not only did Aireka own two small businesses herself, she also worked on AT&T Plenti small business loyalty program for over ten years, and has been a grassroots champion for small businesses in Nashville for years. Who would you rather build a small business marketing platform, a Stanford MBA with little or no experience running a small business or Aireka? Moreover, Aireka moves faster than a bolt of lightning!

We also invested in the List which is the leading platform in the 3.1B dollars matchmaking vertical, where the tools of the trade are still the telephone and notepad. The list is led by Constance Curtis who had spent more than ten frustrating years on do-it-yourself dating apps and is obsessed with how to make it easier for her customers to find love and long-term relationships. She goes to bed and wakes up thinking about how to make the List better serve the needs of her customers coming up with product experiments almost daily.

Perhaps none of our founders has demonstrated greater resourcefulness and hustle than Amanda DoAmaral, Founder and CEO of Fiveable. Before raising seed capital, Amanda didn’t have money to hire additional team members. What she did next is the stuff of legends. She told me that she was going to rent a house in Philadelphia and invite people to live there for free and work on Fiveable. In less than a day, she had published a post about “Fiveable House” on Reddit and a few days later she had two new housemates and team members. It’s precisely this kind of inventiveness and hustle that no fancy MBA or cushy tech job can teach, but is essential for surviving and thriving as a startup founder.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

Venture capital was invented in the late 1800’s and gained prominence in the tech industry in the 1950s. Since then, the world and entrepreneurs have evolved almost beyond recognition, but the venture capital industry has changed little if at all. Judging by the velocity of innovation, the venture capital model is still largely in the Precambrian period.

Particularly in the earliest stages of investment, many venture capital firms still rely on biased networks for deal referral, markers of pedigree and privilege for selection, and luck for post-investment support. This is tragic for founders, limited partners, and society because our industry is vastly under-optimized and failing to fully unlock the potential of the Next Wave of founders.

Beyond building a top-decile fund, my main goal is to inspire greater innovation in the venture capital industry by showing that new models can produce both better outcomes and returns. I’m greatly inspired by funds like Village Capital, Hustle Fund, and Indie.vc that are truly pushing the envelope on investing in startups by employing novel ways to select investments and even the investment vehicles themselves. Naturally, not all experiments in venture capital will succeed, but the only way to improve is to try.

If you could tell other young people one thing about why they should consider making a positive impact on our environment or society, like you, what would you tell them?

The youth in contemporary times is so much more thoughtful and informed than my generation. I don’t think they need encouragement to make a positive impact recognizing the shortcomings currently present in human society. However, what many young people ask me about is what path to take in their professional pursuits. Like our founders, the question is usually not what but how. How can I make a bigger impact? How do I get into the impact investing industry? How do I make my social impact startup successful?

There is no one-size-fits all answer to these questions as each of our journeys is unique. However, there are two practices that I have found, in my experience, to help individuals find the path that makes more sense to them. First, it’s worth trying and experimenting with different approaches that can lead to one’s goal. Second, getting coaching (not mentorship) from those that have done it before is the best shortcut to figuring out how to get to your end goal most efficiently.

We are very blessed that a lot of amazing founders and social impact organizations read this column. Is there a person in the world with whom you’d like to have a private breakfast or lunch with, and why? He or she might just see this. 🙂

Beta Boom’s investment model is patterned after sports academies and coaching approaches. I believe that exquisite parallels exist between developing teams and athletes that can compete and win at the highest level with developing founders and founding teams to win in their respective industries. In my personal pantheon of heroes are world-class coaches such as Patrick Mouratoglou (Serena Williams’ coach), Jill Ellis, Doc Rivers, Steve Kerr, Jurgen Klopp, and the list goes on.

A connection particularly to Patrick Mouratoglou would be life changing! But I’d love to ask any of the coaches I mentioned how they spot early talent, select promising players, and develop their athlete’s mentality and habits to realize their full potential!

How can our readers follow you online?

The best way to follow me is on LinkedIn (https://www.linkedin.com/in/sergiopaluch/). You can also learn more about Beta Boom on our website (https://betaboom.com/) or via our LinkedIn page (https://www.linkedin.com/company/betaboom/).

Thank you so much for this. This was very inspirational, and we wish you only continued success!

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