Chamath Palihapitiya has been commonly referred to as the unconventional VC. And he’s been open about his ambitions to turn his fund, The Social+Capital Partnership, into a vehicle that backs ideas and startups that are changing the way we live, diagnose, learn and more. So it’s no surprise that Palihapitiya and his team are taking a more unorthodox approach to the entrepreneur in residence program in the VC ecosystem.
When you look underneath the hood at what Palihapitiya is doing with the program, it’s clear that he is building a mafia of some of the best technical talent (especially from Facebook) and bringing them under his wing. It’s reminiscent of what Benchmark has done in the past with its EIR program. Chris Farmer, a VC who has held investment roles at General Catalyst and Bessemer Venture Partners, writes in this 2010 Quora post that at the time, data showed that Benchmark had the highest density of EIRs and highest proportion of EIRs that actually start companies.
The entrepreneur in residence program has been in place on Sand Hill Road for quite some time. Essentially, VC firms give successful executives and entrepreneurs a salary in turn for a place to park for six months to a year to figure out what their next company/move will be. They network, meet with the firm’s portfolio, talk to other entrepreneurs and more. There are three possible outcomes: The entrepreneur will found a company within the firm (which the firm will hopefully back); the entrepreneur will join one of the firm’s portfolio companies; or the entrepreneur could take a liking to the VC world and join the firm full time as a partner (which just happened with Simon Rothman and Greylock).
In theory, Social+Capital’s EIR program is similar in that it is giving top talent from companies like Facebook a way to be thoughtful about their next step while still getting paid (though Palihapitiya says it’s not any sort of salary to write home about). But what’s different, he explains to me, is the density of the program and that he is choosing to bring on mostly technical, product-focused individuals. In fact, most of the EIRs aren’t known as entrepreneurs in residence but engineers in residence.
His best outcome for these technical minds is for them to found a company that is tackling a major problem. But figuring the why-and-how angles to approaching these problems from an engineering standpoint takes time. And he wants to make sure that the engineers who can build the next radical, game-changing company in health care or education have the opportunity to do so (and don’t rush to join another big company as an exec).
While Social+Capital itself only has four investment partners, including Palihapitiya, the firm has employed many more EIRs in its two-year history. On average, there are about four EIRs at the firm at any given time. And Palihapitiya says he would have as many as 10 in one class. Currently, the firm has around 10 portfolio companies that are working from its Palo Alto offices.
Past EIRs have included Jassim Latif (ex-Googler), Abhik Pramanik (ex-BranchOut engineer) and Jeremy Karmel (ex-BranchOut Engineer). More recently, Palihapitiya has been recruiting talent from his former employer, Facebook. Current EIRs include Kristina Holst, a key engineer from Facebook who helped build Home, and many of the network’s developer tools. She also happens to be a skilled poker player and made it to the final table at the World Series of Poker earlier this year. James Wang is a former Facebook engineer who worked on Palihapitiya’s international growth team.
Josh Wiseman, a Facebook engineering manager that worked on a number of Facebook’s marquee products including Timeline and Chat, left the social network for an EIR role at Social+Capital earlier this year. Ray Ko was the director of growth and analytics at Facebook and joined the firm in June. Yun-Fang Juan, who helped create Facebook Ads, starts her gig at Social+Capital in September.
The roster of talent speaks for itself. “I don’t know of any other firm who has the density of senior-level product and technical talent just hanging around trying to solve real problems,” Palihapitiya tells me.
Palihapitiya’s theory is that many senior-level engineering and product leads at companies like Facebook, Google and others are being bombarded with offers from other companies. It’s hard to know what you really want when you are in the midst of this jungle, he explains. He wants to give these execs a way to decompress from the company lifestyle to figure out what they really want to do and what problems they want to solve.
Wang told me that he did consider a number of interesting startup offers when he decided to leave Facebook. He was looking for VP of engineering roles at promising companies in Silicon Valley but nothing seemed like the perfect fit. He ended up connecting with his old boss, Palihapitiya, earlier this year who pitched him on the idea of joining Social+Capital. “He told me that he was really passionate about the idea of applying technology and giving new lifeblood to areas like health care, education and other industries,” recalled Wang.
And because Wang already had an interest in health care and education, he was intrigued. Wang started his position at the firm in March, and began spending time with its startups and networks. But instead of being drawn to some of the health-focused ideas, he found that he was interested in some of the educational startups, including Remind 101, which is a private messaging app for teachers.
Holst has also been going through a period of discovery around what she wants to do next. Like Wang, she was leaving Facebook and wasn’t sure what she wanted to do. Over a poker game, Palihapitiya convinced her that Social+Capital would be a good place for her to figure that out. What really convinced Holst was the opportunity to tackle big challenges in difficult markets like health and financial services. Holst is still considering what she will take on as her next challenge, but she’s been particularly drawn to financial services. She’s been actively helping (and coding for) investment management startup Wealthfront with its mobile efforts.
Holst and Wang also say that Social+Capital’s network and openness have been a way for them to learn about new ideas and opportunities. The partners’ calendars are public and EIRs are encouraged to sit in on any meetings that they find interesting.
It’s still early days on evaluating whether Palihapitiya’s EIRs end up creating the game-changing ideas that he talks about. Two of the EIRs in the past class have teamed up on a startup that is still in stealth, he says, and Holst and Wang have not yet decided what their next moves will be.
Nonetheless the network of talent that Palihapitiya is fostering and housing is impressive. As I mentioned above, in many ways he is creating his own mafia of some of the best technical and product minds in the Valley. The firm is slowly building out a group of talented people and putting them in scenarios where they might end up working together to create startups dedicated to tackling big problems. If Palihapitiya pulls it off, this could be the making of a new mafia in the startup world.
“I want to create a platform where smart, technical people and great engineers are able to spend six months to a year just looking at the landscape to figure out whether they want to join a company or start one,” he says.