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Summary:

Many venture firms have EIRs: either Executives-in-Residence or Entrepreneurs-in-Residence. But what, exactly, do they do? Zach Urlocker lifts the veil on this role, detailing his several-month stint as an EIR.

Rue des Entrepreneurs

From 2003 to 2008, I helped build MySQL into $100 million business, then sold it to Sun Microsystems for $1 billion cash. By the time Oracle acquired Sun in early 2010, I was ready to take a few months off. I travelled across the U.S., Europe and Mongolia, learned to play blues guitar and cycled a couple thousand miles. By September, I wanted to re-engage, but I wasn’t sure what kind of opportunity would be the best fit.

Many startup companies and VCs called me, eager to get me to repeat what I’d done at MySQL in the latest open-source company. While they were all good opportunities, I was less interested in reliving the past than in helping to create something that was forward-looking. After all, MySQL’s success came from that very approach; it succeeded because it was different and disruptive.

I was primarily interested in two significant trends in the software industry: the consumerization of IT and the emergence of big data (as well as a bevy of newer data-management approaches variously lumped into the category of NoSQL). I decided I would research these two areas and sought a venture capital firm that invested in those areas to see if there was an overlap in our interests.

While there are as many variations on the EIR position as there are venture firms, there are two flavors, generally speaking: Entrepreneur-in-Residence and Executive-in-Residence. Most firms have some experience with Entrepreneur-in-Residence programs. Essentially, they give office space, coffee and food to a proven entrepreneur so he or she can spend a few months researching or prototyping a new product or service.

The Executive-in-Residence role is somewhat rarer and even harder to define. Basically Executives-in-Residence are guns-for-hire who may or may not be interested in any of the portfolio companies a venture firm has invested in.

I’m not the inventor type, and I didn’t want to just “hang out” at a venture firm to look at their portfolio companies, so I proposed doing a specific research assignment with Scale Venture Partners. Scale typically invests in late-stage Series B or Series C companies, which made it a good fit. I am good at scaling companies, but I don’t know that I’m any better at predicting which Series A investments will thrive than anyone else.

The key area of my research was to analyze some specific developments around Software-as-a-Service (SaaS), big data and NoSQL. This entailed studying the technologies in this area, understanding the optimal use cases and speaking to a broad range of customers and prospects to see what was actually happening in the marketplace and what patterns were starting to emerge. I also worked with the senior partners at Scale to determine how to keep them up-to-date with my findings and how the results would fit into their overall software investment strategy. The important takeaway was that a venture firm is not a research house. At the end of the day, they would measure the success of this effort by whether it helped them make better investments.

While I could have done my research on my own, it was helpful to have an office to go to, access to research materials and introductions from the Venture partners to companies that were using some of the new technologies. While I was primarily focused on pursuing my research, I also gave the investors my perspective on a couple of portfolio companies.

I also attended a few of the partner meetings and saw companies make their investment pitch. Every company had a billion-dollar market opportunity, a dozen marquee customer names and a diagram that put them in the upper-right-hand quadrant. After you’ve seen half a dozen pitches like that, you realize slides come cheap; what’s hard is getting breakthrough momentum.

Scale made two investments while I was there: Docusign, which illustrated the consumerization trend, and Scale Computing, which provides commodity storage for small and medium businesses. Both companies had strong teams and a clear path to the future, but even more important, they had rapid growth in the market. No amount of PowerPoint slides can hide the fact that a company either has traction or it doesn’t.

I continued to meet with other venture firms, recruiters and startup companies beyond Scale Venture’s portfolio. While I was wrapping up my research, I ended up joining a cloud-based help desk company called Zendesk. Working at Scale gave me the perspective to analyze the opportunity as an investor would and be confident that Zendesk was the right fit.

For me, working as an EIR gave me a greater appreciation for the investment side of the business and how companies are valued. It’s amazing to see how many companies a venture firm engages with and evaluates in order to make investments. I have no doubt this experience will be helpful to me in the rest of my career.

Things to keep in mind if you’re interested in an EIR role:

  • Make sure you understand the firm’s expectations. How will success be measured? If you are working on a specific project, what are its deliverables?
  • Pick a Venture firm that is compatible with the type of opportunity you’re interested in. Are they doing early-stage investment or late-stage? Do they invest in applications? Mobile? Middleware? Networking?
  • Agree to a fixed amount of time for your EIR role. Generally shorter is better. If your role runs more than six months, you run the risk of getting too comfortable with the VC lifestyle and forgetting what it’s like to be an operational executive.
  • Be clear about your obligations. Will you be attending partner meetings? Working with portfolio companies? Or doing your own thing?
  • Don’t fall into the trap of trying to rescue a firm’s problem investments unless you’ve done turnarounds successfully and enjoy it.
  • Do your best to add value to the venture firm by introducing possible investments and giving your strategic perspective.

Zack Urlocker worked as an Executive in Residence at Scale Venture Partners from October to December 2010. Prior to that he was Executive VP of Products at MySQL where he was responsible for Engineering and Marketing. He is now Chief Operating Officer at Zendesk.

Image courtesy of Flickr user dweekly.

  1. Inspirational story of an EIR. Learned something new & interesting. Though a MySQL fan I never knew the brain behind it.

  2. I too was an EIR last year, but for Trinity Ventures. Zack wrote a great piece on what it’s like! Here is what I wrote when I finished my EIR time:

    http://www.bulletproofexecutive.com/lessons-learned-from-being-an-entrepreneur-in

  3. It is a disservice to us, the principals, when VPs take credit for what we do.

  4. Love the line. “After you’ve seen half a dozen pitches like that, you realize slides come cheap; what’s hard is getting breakthrough momentum.”

    When I started my tech PR agency in the late 90s, I thought every company that came in and showed us their slides was going to be a winner. Those that failed did so because of poor execution.

  5. I think there might be a critical flaw with this story. When was it written?

  6. EIR:站在VC跟新創企業之間的駐點創業家(Entrepreneur in Residence) – Inside Sunday, February 13, 2011

    [...] Home » FeaturedEIR:站在VC跟新創企業之間的駐點創業家(Entrepreneur in Residence) Nika 11 February 2011 View Comments [image credit:Qole Pejorian]Entrepreneur in Residence,簡稱EIR,有人稱‘入駐創業者’,也有人稱為‘駐點企業家’,本文簡稱駐創家。簡單來說,其實EIR不算是新的職位,他們比較偏向是創業合夥人(Venture Partner),也就是前文那些創投公司(VC)沒有告訴你的事裡曾經提到過會是出任獨立董事的那些人,也是‘當創投公司,獨立董事及其他投資人發生意見衝突時,無庸置疑的,獨立董事一定會站在創投公司那邊 ’的那些人。EIR跟VC雖然看似是站在同一邊的,但EIR的動機和VC其實很不同,而這些不同對於急需VC金援的創業家來說可不能小看。以下根據Startable中Healy Jones關於EIR的文章做了一些編譯整理:對一般人來說EIR的工作聽起來很有份量, 感覺讓你可以以‘顧問’的身份接觸到無限的新創企業(startups),很多資深的管理人士,及VC,還可以得到不錯豐厚的薪水。然後工作內容是跟眾多想跟VC爭取資金的新創企業家接觸以及不斷的生出好點子,然後等遇到有潛力的主意時,你還可能被指派去當那個公司的CEO。很適合待業中的前成功創業家,前經理,前CEO或前CTO。(因為VC不可能主動告知 ‘一般人’他們有EIR空缺)對新創公司來說要得到VC的投資,還要先過EIR這關,要讓他們對你的公司產生極度的興趣不容易,因為他們可能對你正在做的事情有相當程度的瞭解,要說服EIR比說服VC困難。而且最困難的是有些新創公司一點也不希望跟VC合作後要讓EIR進駐他們的公司當CEO或其他C字輩的管理級職位。對EIR來說最終目標就是要以CEO身份加入有錢途有潛力的公司加盟,因為當EIR雖然月薪有USD10000-15000(三或四十萬台幣),但是這份工作通常只持續6個月,或最長到1年,只是一種合作夥伴的性質,而且要在這麼短的時間內同時要為自己找到出路,以及提供意見給VC,壓力量非常的可觀。對VC來說EIR這個角色很重要,因為有點像是VC的眼睛,原因是EIR出身大部分都是成功或有經驗的創業家,比起VC,EIR對於商業模式的臨場經驗較豐富,而且根據自己出身的行業也會展現出對個別領域的專業瞭解。EIR也像是VC的鼻子,因為他們會嗅到新的點子然後跟VC分享。成功的VC可以幫VC找對投資對象。而且因為擔任EIR這個職位的人都是已經有過不少成就的企業家,因此找他們擔任顧問一職的好處是可以幫VC降低投資風險。小結:EIR其實算是在VC身旁的思想家,他們一般都會比較瞭解跟他們出身的領域有關的產業,但是EIR對需要融資的新創企業來說真的是又愛又恨,一方面是希望他們能夠支持自己的公司,但是又怕自己的想法會被沒有道德的EIR給盜走,又要怕他們真的投入到要進駐自己的公司當CEO。其實目前大部分的VC都會跟EIR合作,所以其實不能小看EIR,因為他們的意見絕有可能改變你跟VC之間的關係。對EIR這個議題有興趣的可以參考[My Life as an EIR][6 Months, $90,000 and (Maybe) a Great Idea][Executive Life; On the Inside Track in Venture Capital] [...]

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