(I was asked how an “Entrepreneur-in-Residence” is defined –
and struggling to find a good catch-all explanation, I looked it up)
3 Benefits of Hiring an ‘Entrepreneur-in-Residence’
For most companies, having a CEO who’s forced to constantly divide his or her attention is a surefire way to kill the business. Companies need to focus on successful growth, not developing new projects.
This is why so many big companies, like Google Ventures, Target and Dell, and venture capital funds like Accel Partners and Battery Ventures, are investing in entrepreneurs-in-residence. Harvard Business School and MIT have EIRs in place, as well, and colleges and universities have even started offering educational programming in entrepreneurship.
Hiring an EIR may sound counterintuitive to other entrepreneurs, but this move can help a small business or startup leverage its core competencies, allowing the CEO to focus on big-picture issues while a trusted “intrapreneur” works on new initiatives.
In my own case, as part of my efforts to create a successful marketing agency, I put everything into building my core business. But, as I found, reaching a certain level of success can be a Catch-22 at times, because a lot of opportunities presented themselves which I couldn’t possibly seize on, on my own.
If you find yourself in a similar position, a symbiotic solution is to invest in an EIR as an internal partner. An EIR can give your company a strategic edge by jumping into exciting new ventures while honing his or her own leadership abilities. What about benefits for the companies involved? Here are several.
1. Intrapreneurship facilitates strategic growth.
In today’s business landscape, entrepreneurship has become a hot commodity. While the concept of the “intrapreneur” has been around for decades, with businesses of all sizes now hiring EIRs, intrapreneurship (entrepreneurship within a larger organization) is riding the crest of a sea change in how businesses scale and expand their offerings.
This new breed of worker is represented by the most forward-thinking minds. That’s why businesses that want to harness their potential for building special projects from the ground up should cultivate an “intrapreneurship mentality” within their organizations.
EIRs make sense for any company looking to develop new goods or services.
2. EIRs don’t mirror — they complement.
CEOs should select EIRs whose talents play off their own. For example, I handle celebrity relationships with our brand, so I didn’t need someone to connect us to more celebrities; rather, I needed an operator who could spin up manufacturing and fulfillment to enhance my own core competencies.
Other entrepreneurs and startup leaders can look for EIRs to give them a boost in three key ways:
1. Managing portfolio business. Entrepreneurs-in-residence can lead spinoff brands and equity deals, freeing up the CEO while the business gains new market shares and audiences.
When my company decided it made sense to use our staff’s diverse expertise to expand our offerings, we hired an EIR to manage our equity deals and launch new internal brands and celebrity products. Because I could devote only about 5 percent of my time to my company’s 12 equity deals, they couldn’t be organized until our EIR started, initiated weekly meetings with portfolio companies and organized summaries of those business.
EIRs also help founders avoid the pitfalls inherent to becoming “parallel entrepreneurs,” or starting companies concurrently. As HubSpot co-founder and CTO Dharmesh Shah learned the hard way, running two startups essentially sets one up to fail because a CEO can’t devote himself or herself to two all-consuming projects. However, EIRs can lift some burdens so that both ventures succeed.
2. Developing key partnership strategies. CEOs should include EIRs in meetings that concern venture capital, influencers and agencies This way, the entrepreneurs-in-residence can connect the dots about portfolio businesses and hit the ground running with spinoff brands.
For instance, when a celebrity wanted our assistance in starting a business, our EIR offered to develop the partnership. His experience as an entrepreneur and his ability to capitalize on connections provided counsel and knowledge that benefited the deal. EIRs must be given all the resources they need to succeed with portfolio companies.
In another situation, I had a particular project that required opening up specific resources. So, I involved my EIR by introducing him to my network of connections — PR execs, agents and relationship managers — to ensure he had at his disposal all the communication tools he needed.
3. Streamlining nitty-gritty operations. EIRs must be given enough autonomy to delve into the nuts and bolts of meeting clients’ needs. Google’s EIR Jewel Burks, for example, assists small businesses by optimizing their web efforts and giving advice to their teams. EIRs must dig in and work at this granular level, providing the specific services customers demand.
In another instance, one of our portfolio companies had fulfillment issues. So, our EIR helped the client’s team overhaul its entire process. He now sits down with the CEO every week to answer questions and solve operational problems.
EIRs can also pull in team members and bring them up to speed on projects as needed. This will allow companies to capitalize on the strengths and expertise of their staffs to solve specific issues without everyone needing to be on board from the outset.
Not only do small businesses with EIRs benefit from having dedicated intrapraneurs develop unique initiatives, but they can keep their best people engaged long-term.
Meanwhile, entrepreneurs-in-residence complement their CEOs’ strengths, leverage their companies’ strategic advantages and boost their brands’ output. With both sides seeing such incredible reciprocal benefits, it’s a win-win.
Sep 9, 2014 – I’ve held the title of entrepreneur-in-residence (EIR) at four different organizations, so I get asked this question frequently. … Traditionally, an EIR is a position at a venture capital firm. Usually the EIR is an accomplished executive whom the firm is willing to back financially.
I’ve held the title of entrepreneur-in-residence (EIR) at four different organizations, so I get asked this question frequently. There’s no unambiguous answer because the job has to fit the priorities of the institution. Still, I can shed some light.
[Disclosure: I have an ownership position in the companies mentioned in this article.]
Each time I’ve been EIR, it’s been a newly created position. I’ve never had a predecessor, and in each instance I wrote my own job description. Despite the name of the position being the same, the duties, responsibilities and compensation were different.
Traditionally, an EIR is a position at a venture capital firm. Usually the EIR is an accomplished executive whom the firm is willing to back financially. Often, an EIR is between stints running a company or is someone who just exited from one of the portfolio companies of the firm. An EIR typically gets office space, some administrative support, a business card and maybe even a stipend. It is not meant to be a high paying job nor a permanent position. The goal is for the EIR to create the next company that the VC firm will fund. Typically VC firms evaluate deals that come their way and then decide if the management team is strong enough to justify an investment. With an EIR it’s inverted—they already like the management. They just need to find the right investment vehicle.
An EIR may get asked to help out on due diligence and/or provide operational assistance to existing portfolio companies. The goal, however, remains: to develop a fundable concept that the VC firm can seed and which the EIR can run (or at least be co-founder). There are many variations on this theme, such as investing in an existing company, doing a roll-up or buying a distressed company.
Another way in which an EIR might help a VC firm is if they are a fundable executive but also have deep domain expertise in an area of thematic interest to the firm. For example, a VC firm might say to themselves, “We believe that distributed energy generation is going to be a megatrend, and we really need to understand the opportunity in the space and develop our investment strategy.” They might hire an EIR with the right skills to research the market, develop an investment thesis and then either find a deal or write a business plan for a new company. The best VC firms see these trends emerging long before most people—and are exiting their investments just as the masses are rushing in.
At the University of Illinois at Urbana-Champaign, I worked for their captive venture capital arm, Illinois Ventures. The mission of Illinois Ventures was to do seed stage investing in technologies coming out of research laboratories in Illinois. Funding a graduate student or professor as a part-time CEO has never been a good practice. When a professor or group of professors (or their students) developed an innovation that justified starting a company that Illinois Ventures wanted to fund (assuming there wasn’t already a credentialed leader in place), I became the business co-founder of the company.
The professors and their students were the technical leads, and I helped craft an investable thesis, handled all of the foundational issues (corporate form, licensing the technology, setting up an option pool, recruiting the team, negotiating the seed round, etc.) and figured out the business model. Because I typically was running two or three businesses at a time (each 1-2 days/week), the startups got the benefit of a seasoned executive without paying full freight.
With university-based innovations, one often isn’t sure at the outset which industry sectors the business is going to enter—nor is it certain what the business model is going to be. In this context the EIR is an all-around athlete who can wear many hats and add value in multiple ways . As the businesses progressed and we moved toward their Series A rounds, we were then able to recruit a team with the domain expertise needed to take the companies to the next level.
In some instances I then passed the baton to a new CEO, but in the case of Advanced Diamond Technologies, I stayed with the company and ran it for the next several years as full-time CEO. In another instance, I recommended to the investors that we shut down a company since the technology, in my opinion, would never be commercially viable.
At Northern Illinois University, where there aren’t many organic startups and the entrepreneurial culture is not yet ingrained, my job was to light a fire underneath the students and faculty to get them to begin thinking more entrepreneurially about their work and provide coaching and mentoring as needed. I also assisted with tech transfer, licensing and industrial partnerships.
At Argonne National Laboratory, where I was co-executive director of the entrepreneurship center (and de facto EIR), the goal was to mine the portfolio of technologies that Argonne had and identify those with the most commercial potential. From there, we would help form the companies in much the same way that an incubator might.
Just recently I became EIR at Energy Foundry, an energy and smart-grid focused venture capital firm in Chicago. At Energy Foundry, I’m helping to identify promising companies or technologies that are worthy of a deeper dive by the investment team. My colleagues and I also spend time giving guidance and advice to companies that aren’t quite right for the fund.
As you can see, there is no single definition nor a one-size-fits-all job description for an EIR. To understand the EIR’s motives, you need to look to see who’s paying them. If it’s a VC firm, you can bet that sooner or later, the rubber will need to meet the road in a fundable opportunity. If it’s at a university, there may be other payoffs, such as faculty mentoring or student experience.
Neil Kane (@neildkane) is the president of Illinois Partners which helps companies, universities and investors with innovation strategies and technology commercialization.
I write about leadership and turning innovations into businesses.
By day I’m the Director of Undergraduate Entrepreneurship at Michigan State University, but really I’m a repeat entrepreneur and technologist with a penchant for doing the hardest things possible—namely turning technological innovations from universities and federal laboratories into businesses. I founded and am the president of Illinois Partners, a firm that is a leading authority on technology commercialization and innovation, and I have the battle scars to prove it. I’m also the CEO of a toy/puzzle company that makes The X-Cube. I co-founded Advanced Diamond Technologies, among others, and have been the entrepreneur-in-residence at the University of Illinois and Northern Illinois University. I had a comparable role at Argonne National Laboratory. With an undergraduate degree in mechanical engineering, an MBA in finance, sales training at IBM, and improv instruction at The Second City, I’ve worn just about every hat there is. My first business was a barbecue sauce company. Earlier in my career I did time at IBM and Microsoft. I was named a Technology Pioneer by the World Economic Forum and was recognized for excellence in entrepreneurship by the National Science Foundation. Twice I was invited to testify in Congress on issues related to technology transfer. I had the pleasure of being a mentor in the first cohort of the National Science Foundation’s Innovation Corps program.