What Is an Entrepreneur in Residence and Why You Need One
- 09 October, 2013 14:36
The role of Entrepreneur in Residence, or EiR, has never been well-understood. That wasn't a big deal in the tech industry when EiRs were found mostly at venture capital firms, but the role has expanded to educational institutions, governmental agencies, and -- increasingly -- technology companies.
The transformation signals a new appreciation of the importance and opportunity presented by the startup economy.
entrepeneur, EiR, Entrepreneur in Residence
Traditionally, EiRs worked with VCs to scout and vet investment. But according to startup expert Rieva Lesonsky, CEO of Growbiz Media, "the more exciting part is how EiR's have graduated from there and are now going into very big corporations." The EiRs generating buzz now are typically "hired to bring the entrepreneurial perspective to corporate execs who may not truly know about entrepreneurs," she says.
The Transformation of the 'Traditional' Entrepreneur in Residence
Entrepreneurs in Residence came about as temporary roles for startup veterans who could help VC firms with high-level strategy and introduce other entrepreneurs and potential new deals. In return, the EiRs drew a salary between startups and could score a possible investment in their next venture. VCs that employ these kinds of EiRs reportedly include Accel Partners, Foundation Capital, Bessemer Venture Partners, Redpoint Ventures, Greylock Partners, Venrock, Norwest Venture Partners, Sutter Hill Ventures and Trinity Ventures.
But even at VCs, the EiR role is changing. Russ Wallace is an EiR at RAA Ventures, where he came on board "to run something, we just didn't know what." The goal was to bring his "strategy and tactics toolbox" to whatever project he was placed on.
Currently working on the fantasy sports site DoubleUp, Wallace was able to choose which idea he'd be attached to -- and then hash out the arrangements on that particular project. Right now, he says, "I do everything the engineers don't want to do."
Beyond VCs, Entrepreneurs in Residence are also finding homes in academia. Universities like MIT, Cornell, and Harvard Business School all have EiRs in advisory roles, helping students and faculty make the most of their ideas and turn breakthroughs into businesses.
The Poster Child for Corporate EiRs
The real Entrepreneurs in Residence action, though, is in the corporate world, where Dell's Ingrid Vanderveldt may be the best-known example. (With the possible exception of Craig Walker, who became an EiR at Google Ventures in 2010.) When Vanderveldt became Dell's first EiR in 2011, there were only six or seven others in Fortune 500 companies, she recalls. "It's still not common," she allows, "but it's definitely a trend."
At Dell, Vanderveldt says, "we set up my work in a different way." The idea was to "intentionally leverage me and my role for outreach to into the [entrepreneurial] community." Her task was to bring the perspective of the entrepreneur to the corporate world. Vanderveldt says that Dell gave her the opportunity to leverage the power and insight of a Fortune 500 company to shape the future of business, "to help entrepreneurs early on, when they need it the most."
Initially, Vanderveldt adds, she was "on the road 80 percent to 90 percent of the time, being in the community and listening and taking action." "We dreamt up the EiR role," for me, Vanderveldt recalls. But things have gone farther than she ever imagined. "I was supposed to be here for six months, with two weeks on and two weeks off." She's now been at it for more than two years.
What Does a Corporate Entrepreneur in Residence Really Do?
Bringing the entrepreneurial mindset to the corporate world can sound a little touchy-feely, but execs who built their careers in large organizations may not even know what they don't know about entrepreneurs, Lesonsky says. Fundamentally different from both enterprise customers and consumers, entrepreneurs often don't get what they need from their tech vendors.
That makes it the EiR's job to tell their corporate overlords what they don't know -- and to help them cut through the red tape to create products and programs that are actually valuable and accessible to startups. "There's no point in having an EiR if you're not going to implement what they say," Lesonsky adds.
Unfortunately, companies are not always comfortable changing their business practices to better serve entrepreneurs. It's not enough, Lesonsky warns, to simply offer the same products, only smaller... to "cut off some arms and legs and put it in a smaller box." It's the EiR's responsibility to say, "This is how you make it designed for entrepreneurs."
Dell's Vanderveldt acknowledges that "every EiR program is a little bit different," but describes her job as providing access to three things:
She helped create Dell's Office of the Entrepreneur in Residence, which includes the Dell Center for Entrepreneurs, the Dell Founders Club and the $100 million Dell Innovators Credit Fund. There's also an opportunity to extend corporate expertise to startups. To share how Dell leverages social media, for example, Vanderveldt pulls in Dell experts for one-on-one conversations with entrepreneurs.
She has also been working to foster entrepreneur-friendly legislation at the state and federal levels. "We work with governors and legislators on state-specific efforts to bring in EiRs to make it easier to do business." The idea is that:
"A select group of EIRs would be placed in key departments for a couple of years at a time. Reporting to agency heads, these innovators would advise on efforts to make operations more efficient and responsive, while exposing federal officials to new ideas... Entrepreneurs could help with pinpointing any duplicative procedures for obtaining a business license and improving how to inform someone starting out a business about environmental or labor regulations and would be able to provide an outside perspective to government agencies as to how they might be able to take a more innovative, or entrepreneurial, approach to solve top problems."
Texas, for example, just passed Senate Bill 238, which authorizes the state to hire an EiR to "improve outreach to the private sector."
In fact, EiRs are popping up in many governmental organizations: The U.S. Citizenship and Immigration Services (USCIS) created an EiR program last year and Elizabeth Gore is a Resident Entrepreneur at the United Nations Foundation, where she chairs the United Nations Global Entrepreneurs Council.
Does Your Company Need An Entrepreneur in Residence?
"If entrepreneurs are your market, or if you want them to become your market," Lesonsky says, "then hiring an EiR cannot do you any harm... as long as you are open to what they say."
For tech vendors, she adds, it can really help to talk about how entrepreneurs actually use your products. Small business and startups typically don't have IT experts on staff, and they are not CIOs. They don't care about speeds and feeds -- to properly reach them, you need to speak the language of entrepreneurship, of the benefits, not the technology itself. "It takes an entrepreneur to do that."
Vanderveldt agrees on the importance of convincing companies to share their expertise. "If a large corporation is going to stay relevant, they have to be innovative," adds Vanderveldt. Those corporations that reach out to embrace entrepreneurs can be the innovators. They are leading the way."
What Makes A Good Entrepreneur in Residence?
Everyone agrees that an EiR's first qualification is experience as a real-world entrepreneur. "I've been a lifelong entrepreneur, I've built and sold a number of companies in a number of industries," notes Vanderveldt. That kind of experience is essential to understanding the startup market and the needs of entrepreneurs, but also to gain corporate credibility.
EiRs must also be great two-way communicators, able to listen and distill knowledge to their entrepreneurial customers and their corporate employers. Third, they need an unquenchable passion to make things happen. Bringing transformative change to entrenched corporate cultures can be frustrating, and EiRs have to believe in the importance of the mission -- that it really does matter.
It's also important to have transparent goals, to understand that the EiR job is "in service to the corporation and also to the community. To act as that bridge and always be open to collaboration. [To ask] How can we do even better business together?
Wallace, at RAA Ventures, has a simpler list of EiR requirements:
A robust network of contacts to bring in new deals and expedite current projects.
Startup experience -- knowing what it takes to make a startup successful.
Technical chops -- being able to fix problems as they occur, sort of like a "super product manager."
The Value of Entrepreneurs in Residence
For corporations, EiRs can be "self-serving in some aspects," as they're designed to boost sales to startups, Lesonsky acknowledges, but they also "can really help entrepreneurs."
Ideally, corporate EiRs create value for both tech vendors and their startup customers. At best, it's a win/win, a chance to build opportunity for startups and loyal customers for vendors. As Vanderveldt notes, the programs she's worked on at Dell are things "I would have loved to have had when I was an entrepreneur."