Challenges of Being an Executive in Residence (EIR)
This is the fourth post of a multi-part series on being an Executive in Residence (EIR). The initial post outlining the full series can be found here. The previous post was “How do you get an Executive in Residence (EIR) role?“
If you’ve made it this far in my Executive in Residence series, you might be thinking, “This job sounds like a dream come true. What could be better than a role where I’m working with intelligent people, meeting brilliant entrepreneurs and given time to think carefully about my next company?”
I’m a big fan of the Executive in Residence (EIR) role, when it’s taken for the right reasons and with the right firm. That being said, the EIR role is one of the more unstructured positions out there, and can easily lead to an unproductive outcome for both the executive and the venture firm without the right perspective and motivation.
There is no question. The biggest lurking challenge around being an Executive in Residence is time management.
For an operating executive or CEO, you likely have gotten used to the implicit structure imposed by running an operating business. There are people and teams who report to you, guidance you give regularly on talent and strategic decisions, key results you are responsible for. If you’ve worked for a company of any scale, your biggest issue previously was likely paring your calendar back regularly to give yourself time to think.
You know what greets you as an EIR on your first day? A calendar full of empty. More importantly, while there are meetings all the time, you aren’t actually required for any of them.
As a product manager, it’s second nature to think backwards from your goal, and create a set of milestones and checkpoints. As an EIR, I’d recommend thinking about the following milestones, within a rough timeline of one year:
- What’s your investment thesis / area of focus?
- Are you going to be an investor or an executive?
- Are you going to start something or join something?
- Are you going to look at companies outside your firm’s portfolio?
- What stage of company and role are you looking for?
Investment Thesis & Focus
The first thing that happens when you join a venture capital firm is that you realize the world of successful startups is much broader and more diverse than you thought. This goes beyond simple descriptors of “consumer” and “enterprise”. Given your unique experience and skills, you may find yourself fascinated with marketplaces, collaborative sharing, mobile communication, next generation CRM, big data infrastructure.
The problem is, no one can be deep on everything. It’s all too easy to find yourself broadly exploring an ever increasing number of sub-segments, business models and industries. In a partnership, you’ll find that every partner has levels of expertise and exposure on multiple domains. As an EIR, you could potential spend time digging into any one of them.
Some of this is good, to be sure. One of the perks of the EIR role is the time and access to broaden your horizons. However, the challenge for an EIR is that, in a limited time frame, you have weeks and months to explore, not years. Most successful EIRs come to an opinion fairly quickly (within 6-8 weeks) of the rough dimensions of the currently exciting areas of innovation to focus on.
Investor vs. Executive
Being at a great venture capital firm inevitably forces even stalwart operators to ask the question of whether or not they want to be an investor. Most likely at this stage in your career, you’ve already started to take advisory roles or participated in seed rounds as an angel investor.
EIRs rarely transition to investing partners, but it happens more often than you might think. (Most recently, Simon Rothman transitioned from an EIR role to a general partner at Greylock).
The real issue is one of time frame and priorities. In the end, the process that investors go through to evaluate companies and opportunities has very different dynamics than finding a good fit for a CEO role. While most EIRs have this internal debate at some point, the sooner you can resolve the issue with confidence internally, the sooner you can optimize your efforts towards a successful outcome.
Let’s face it: defining success is a big part of achieving it.
Entrepreneur vs. Executive
Alright. You’ve figured out your investment thesis and areas of focus, and you’ve got confidence now that while you respect venture capital quite a bit, you’re an operator. The next challenge that rears its head: are you sure you don’t want to start something yourself?
Meeting with successful, passionate entrepreneurs day-in and day-out does a funny thing to you. It’s addictive. Their energy is tangible. And when you work with a great firm, more often than not, you meet superlative entrepreneurs, many at later stages of company development, proving that not only can it happen, it actually happens more often than you thought.
In my first post, I tried to explain the differences between an entrepreneur-in-residence and an executive-in-residence. As it turns out, however, at most firms, there is a lot of flexibility around this issue. At least in Silicon Valley, no one is going to talk you out of building something from scratch if you get set on doing it.
I hate to be cynical, but watching a number of colleagues go through this, the pattern is fairly predictable. The reality is, most people actually have the answer to this question before they start their role as an EIR. What actually happens is that EIRs tend to forget this fact quickly, spend some time debating it internally, and then realize that their initial assessment was correct all along.
Navigating Firm Bias
Another challenge that confronts EIRs is firm bias. By taking a role with a specific venture capital firm, a number of questions are raised:
- Will you only look at companies that fit the firms / partners current investment thesis?
- Will you only look at companies that the firm has invested in?
- Will you engage with recruiting partners from other firms or third parties?
Underlying these questions is an implicit misalignment between the EIR and the firm. The firm is investing time (it’s most precious resource), reputation and knowledge with you. At the same time, as an EIR, finding the right fit of company, stage, product, team & timing for a CEO role is exceptionally difficult. Spreading the net as far as possible definitely can increase chances for a successful fit in a given time frame.
For most EIR roles, the answer to these questions is best resolved directly, with the firm, before joining. Personally, I was fortunate enough to be an EIR at Greylock Partners, where the firm’s perspective was that any area or company that was interesting enough for me to engage with was by itself a strong vote of confidence. Greylock is one of the oldest and most successful early stage venture capital firms, and sees its network as extending, through people, more broadly than just to the specific companies where they are currently invested.
By the way, for this reason, it’s not unusual to see EIRs split their role between two firms, just to signal strongly to both the firms and the outside world that they are not committed to a single firm. While I don’t believe this is necessary for a successful EIR role, I do personally recommend that EIRs broaden their network to companies and opportunities beyond a single firm.
Company Stage & Role
This might be one of the biggest challenges an EIR faces in their search. What are you actually looking for?
- Are you interested in a startup that is pre-product/market fit? Or do you operated best when product/market fit has been established?
- Do you add the most value at a 20-person company going to 100+, or a 300 person company going to 1000+?
- Are you willing to consider a COO role, or only a CEO role?
- Will you consider GM roles or functional leadership roles at larger companies?
To some extent, you have time to entertain and consider a wide variety of roles. There is significant learning, both about the company and yourself that takes place when you engage on a potential role. That being said, spending time on roles you are not inclined to actually take is expensive, for both you and the company.
Tell Us Your Story
In the previous four posts, I’ve tried to remain objective and incorporate lessons from other EIRs that I’ve had the opportunity to both know and work with. Due to popular demand, however, my final post in this series, Did you like being an Executive in Residence (EIR)?, is coming up next.