The Benefits of Becoming an Entrepreneur in Residence | CTO of Cloudera, Amr Awadallah

And so you went on to work at Yahoo about 8 years, right?

Yes.

And then after that became an entrepreneur in residence at Accel Partners, which is an interesting kind of switch because you're straddling the startup world with the venture capital world, which as much as they do meet are very different worlds, right? And so I'm interested to hear you reflect on that experience. Is it something you'd recommend to some of these entrepreneurs in the room as something to pursue? pursue, although I know it's hard to get, and then what did you learn at Accel Partners that laid the foundation for Cloudera?

Yeah. So first, show of hands, how many of you heard about this EIR, entrepreneur-in-residence role before?

So I'm seeing about maybe 50% of the room raised their hand. So for the remainder—

for the remaining half, the EIR role, it's a role where you're kind of working with a venture capital firm, It's not for a very long time, it's 3 months, and if you stay longer than 6 months, then they get worried about you.

So you don't want to go longer than 6 months. And it's an opportunity for you to learn about what's happening in the space right now, see how VCs think and how they go around their process of evaluating companies, see what other people are pitching right now, what's a very hot thing right now that maybe you should avoid because that's what 20 other companies are going to be working on that thing, so maybe you shouldn't work on it too.

And in return, what they get from you is 2 things. They get from you help in terms of due diligence. So you might have certain expertise in a certain domain with which you can help them. So that's one of the first things that you give them back. And but really why they do it is they want to get first dibs.

They want to get first dibs on giving you the term sheet and giving you an offer for your startup. So typically it's actually very hard to become an EIR.

You don't become an EIR by applying to become an EIR.

You become an EIR by being invited to be an EIR with a VC firm. And typically they would invite you in one of 3 cases.

Either you were the founder of some company that did very well already.

So for example, Instagram, you were the founder of Instagram and now you're leaving Facebook and they say, hey, come sit with us before you start your next thing. Or you worked with one of them before. So one of these VCs, and that was what happened for me, is one of the VCs at that firm, the firm is called Accel Partners, he was my manager, my boss at Yahoo.

So he knew me very well from Yahoo, knew how hard I work, and that's when he heard I was leaving, he said, hey, come with me at the firm. The third case is if you were one of the very early, not the founder, but one of the very early founding team of a major success like Google.

So if you were one of the first 50 engineers, 100 engineers at Google, then typically you would get invited to be an EIR.

So I don't want to tell you that it's hard for you to become an EIR now because you're still at the beginning of this journey.

It's possible, but it's very, very rare that it happens in your case. I just want to set your expectations there. In terms of the experience itself, for me it was a very positive experience.

People have mixed views on the EIR.

Other people that did the EIR, if you ask them, they might not agree, they might tell you no, we did not enjoy it. But for me personally it was very, very positive because of 2 things.

First, it helped me avoid doing an idea that was a very crowded idea. So I had 2 ideas that I wanted to do, one of them is what Cloudera is today which worked great, so I'm happy that that was the one I picked.

Okay.

The other one was in the virtual machines space and by being at that firm I saw that there was— at the VC firm, I saw that there was like 20 other companies thinking about doing something very, very similar. And you don't want to start a company when there's already 20 other companies thinking about the exact same thing. The chances of your success and you standing out would be much, much lower. So you want to avoid that. So that was one of the key benefits, but also one of the key lessons I would like to provide to you is watch out to make sure that your idea is unique enough because you don't want to start something with very heavy competition off the bat.

You want to have a time advantage of 1 year, 2 years before somebody else jumps with you in that space.

So that was the number one benefit of being in EIR.

The number 2 benefit of being in EIR was frankly it increased the chances of us getting funding much easier.

So by the end of the 3 months that I was there, they helped me find my co-founders. So I actually happened to find my co-founders from that experience.

And October 2008 is when we raised our first round of funding from them.

For those of you that remember, October 2008 was the financial meltdown of the mortgage crisis.

And again, funding was shut down at that time.

Sequoia published this presentation with rest in peace, no more investing will happen for many, many years to come. And despite all of that, because we have been there, because of the connections we built, by being inside the firm, we were able to still raise a very healthy round of funding, it was $5 million for a very decent valuation despite the market being in the shape that it was.

So that was why I would say it was a very, very positive experience for me.

Thank you.