Benchmark Capital, the respected Silicon Valley venture capital firm that backed eBay, continues a hiring spree: It has just hired three new entrepreneurs-in-residence, and an executive-in-residence.
And it could herald a new model for the way VCs work in Silicon Valley: By outsourcing, or perhaps more accurately, insourcing.
The new appointees include Rob Bearden (top left), who was a senior executive at JBoss, Red Hat and OpenSpan; Lewis Cirne (top right), founder of Wily Technology; Dan Finnigan (bottom right), a senior vice president at Yahoo, responsible for HotJobs (yep, another evacuee); and Keith Krach (bottom left), who co-founded Ariba, who will serve as a CEO in residence.
Few firms have hired as many EIRs as rapidly as Benchmark. EIRs are entrepreneurs who reside at a venture capital firm’s offices to look for a great idea, and when they find it, Benchmark will then get a first shot at funding it. CEOs in residence are executives that a venture firm appoints to help run one of their portfolio companies, usually on an interim basis.
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Benchmark is known for its democratic structure among partners; the partners don’t hire any associates or principles to do grunt work for them like many other firms do. The firm’s partners say they want to avoid hierarchy.
However, it appears Benchmark is relying on an increasing number of such EIRs to help source deals — so it really is a sort of “outsource” model to the VC world. Though, because they’re working in-house, we’ll call it “VC insourcing.”
I dropped by Benchmark’s offices today to meet with Steve Spurlock, a Benchmark partner, and also met with Cirne and Finnigan. Spurlock didn’t really agree with my interpretation of what was happening. He insisted Benchmark hasn’t purposefully increased its reliance on EIRs, but that it has instead been opportunistic, hiring great executives when the occasion arises.
Typically, Benchmark expects the EIRs to find their ideas and develop them within six months, though their residence times vary. While Benchmark has hired numerous EIRs lately, previous EIRs keep leaving the nest. In June of last year, for example, former Google employee Bret Taylor and Jim Norris joined Benchmark and incubated FriendFeed, a social network information sharing site. They then left Benchmark five months later to build the company full time. Other recent notable EIRs include Nirav Tolia, who has yet to emerge publicly with his idea, Mike Cassidy and Dave Goldberg.
Here are some notes on what the new guys will do:
–Bearden will evaluate new open source business opportunities.
–Cirne told me he’ll concentrate on open source and web infrastructure companies. Whenever new platforms emerge, such as today’s open source and software-as-a-service trends, web and management infrastructure companies grow up around them. Years ago, he won big by betting on the Java platform, when he created Wily around it.
–Finnigan told me he’ll focus on the Internet advertising market. He thinks there are large opportunities in vertical marketing algorithms for advertising. He thinks the advertising industry can be boiled down to about 13 or so industry verticals, and that they’ve been underserved, but that new technologies will change that. Companies are beginning to exploit user profiles to allow for better targeting. Local advertising, too, has remained underserved, though Google changed that recently, he said — leading to big possibilities when you combine efforts that are both vertically focused and local. Recruitment, in particular, intrigues him. Companies like Jobfox, and companies doing video speed-dating are helping create new ways of matching that didn’t exist before, he said.
