Gurus in the Garage

A special breed of adviser helps entrepreneurs with everything from recruiting talent to negotiating the first million in seed money. These “mentor capitalists” often spell the difference between success and failure. What they do—and how—may surprise you.

by

Dorothy Leonard

and

Walter Swap

by

Dorothy Leonard

and

Walter Swap

From the Magazine (November–December 2000)

The Idea in Brief

In just five years, new college grad Scott Rozic went from naive but enterprising Silicon Valley wannabe to CEO of successful software dot-com XMarkstheSpot. How? He drew on a scarce resource essential to creating vital new businesses: mentor capitalists.

These cashed-out, highly successful entrepreneurs love the thrill of the start-up game. But they also feel deeply committed to cultivating networks of relationships with fledgling protégés—and giving back to their communities.

Mentor capitalists provide real-time, intensive coaching on how to quickly build successful businesses. They get deeply involved in the week-to-week refining and testing of business models and product prototypes, attracting top talent and big money and helping entrepreneurs build coherent, efficient organizations.

The Idea in Practice

What do Mentors do?

The best mentor capitalists actively teach—while refusing to make decisions for their protégés. Their teaching styles vary—from asking probing questions (“What’s the one-liner? What does this company do?”) to suggesting rules of thumb (“Focus, focus, focus”). They also encourage learning by observing; for example, by watching an interim president hold a planning session.

Mentor capitalists provide seven types of expertise:

In 1995, Scott Rozic graduated from college with a business degree, a credit card, and an idea for a software company. He piled all his possessions into his Pathfinder and headed to Silicon Valley. His modest goal: to find a high-powered, established player who could teach him the intricacies of strategy and finance—someone who really understood how to build a business from the ground up, preferably someone who’d helped run a billion-dollar business before. Fortunately, a classmate’s father introduced Rozic to Stan Meresman, an executive just leaving Silicon Graphics. Meresman agreed to meet Rozic for 20 minutes over a cup of coffee. Meresman found the recent graduate fascinating. The younger man had no experience, no expertise, and no prospects for immediate funding, but Meresman discerned something special nonetheless. “I was confident that he would someday be the CEO of a large, successful software company,” he recalls. Because he thought Rozic had a lot of potential, and because he enjoyed seeing young people succeed, Meresman took Rozic on as his protégé.

A version of this article appeared in the November–December 2000 issue of Harvard Business Review.

Dorothy Leonard is the William J. Abernathy Professor of Business Administration Emerita at Harvard Business School and chief adviser of the consulting firm Leonard-Barton Group, which conducts workshops on this and other related topics. She is the author or coauthor of four Harvard Business Review Press books, including Critical Knowledge Transfer (2015).
Walter Swap is Professor of Psychology Emeritus, former Chairman of the Psychology Department, and former Dean of Colleges at Tufts University. He is the coauthor of three books, including Critical Knowledge Transfer (Harvard Business Review Press, 2015).

Gurus in the Garage

The Idea in Brief

What do Mentors do?

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