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Morgan Stanley CFO Ruth Porat to be Google’s new CFO

latimes…”It’ll definitely turn some heads,” said David Arnold, president of Arnold Partners, a Los Gatos, Calif., executive search firm. He said he placed three Wall Street CFOs in the same roles at tech companies just last year. “There’s something going on.”

The balance of power between Wall Street and Silicon Valley shifted another degree westward.

Ruth Porat, chief financial officer of Morgan Stanley, is leaving to take the same job at Google Inc., a symbolically significant move by a high-profile Wall Street executive — and one of the financial industry’s most prominent women.

Porat’s move after 28 years at the white-shoe banking firm surprised both the high-tech and the high-finance worlds, and observers said it signaled deeper shifts between the two sectors.

Porat will start her new job May 26, reporting to Google’s chief executive and co-founder, Larry Page.

Read the article by Dean Starkman about Google’s new CFO in the Los Angeles Times

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Reinventing Your Brand For CFOs

reinventI had breakfast with a fellow sole proprietor professional service provider yesterday. He was down in the dumps because his specialty (M&A Advisory) in a certain industry sector is out of favor in today’s economy. For a half an hour he mused on what used to be and how he used to provide great management advice to this sector. Finally I had enough and stopped him. Loathing and self-pity is really a waste of time. It struck me like lightning what this guy needed to do: he needed to reinvent his brand.

Just as I recently posited in a brief post on LinkedIn about how large recruiting firms are spinning the new hot industry sectors, this is what he needed to do. Case in point: In the early 2000s when the Clean Tech industry came into favor, a team of recruiters at a large retained search firm working in the Semiconductor industry re-branded themselves to take advantage of this market shift. Overnight these same recruiters became the industry leaders for the C-suite in Clean Tech. Guess what ─ these same recruiters are now repositioning themselves once again as the industry leaders in the “Internet of Things”and “Industrial Internet.” Why? Clean Tech is dead and Semiconductors have not returned. These recruiters are doing this with purpose and they are arming themselves with knowledge in these new industries, so I am not criticizing this strategy, I am applauding their moves. The white papers, thought forums and seminars they are creating are helping to build this fledgling industry. This idea of rebranding brings up two thoughts relative to my own retained search clients and CFO candidates.

Arnold Partners: Building on Strengths to Expand Services

The Arnold Partners philosophy has and continues to be a focus on the role of the CFO. We continue to find top talent in a wide variety of industries. In the last six months we have found CFOs for the following industries: SaaS, Enterprise Software, Connected Home Technology, Specialty Chemical, Biotechnology, Medical Device and Gaming. That is about as wide a mix as I can imagine. What is common to these searches is that they all needed strategic CFOs with different skill sets that were right for a certain stage of company. But here is the spin: In speaking with the investors of these companies, I mentioned that I was expanding my brand to include Audit Chair Search. Without missing a beat, EVERY investor told me this was an excellent idea and that they would be happy to work with me when the time came to look for an independent Audit Chairperson for their Board of Directors. We just completed an Audit Chair search for a hot pre-IPO SaaS company and we are now engaged on the Connected Home Technology client. So this spin is not a wholesale change of who Arnold Partners is. It is an iteration and a leveraging of our many years of hard work in building relationships in the CFO community.

CFO Candidates: Take Stock with a Personal Inventory

As a CFO you have the most malleable skill set in the C-suite. If you are a marketing professional or an engineer it is more difficult to change industries. But as a CFO (or aspiring CFO) you have an opportunity to take your core skills and apply them to a wide variety of industries. However, in terms of branding yourself and managing your own personal brand, I highly recommend that you take a personal inventory. What have you added to your skills and experience in the last year? What have you seen in your industry sector that is positive in terms of growth? Are you in a dying industry? What steps do you need to take to get into a hotter sector? All of us professionals need to manage our own brand and we owe it to ourselves and our constituencies to take inventory, perform a gap analysis and do something about it.

My Colleague: Got the Kick in the Butt He Needed

So my breakfast buddy reached out to me later in the day. He said I motivated him to get in gear and he was voraciously reading material about a new industry sector into which he feels he can parley his deep M&A advisory experience. He started to do research into the industry leaders and found one of his old mentors in a key leadership position. Talk about epiphany. What are you doing to manage your brand? Is it time to reinvent or at least iterate?

If you need a CFO or an Audit Chairperson, or have your own story about rebranding yourself, let’s talk. Contact me at Dave@arnoldpartners.com or call 408-205-7373.

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Market Outlook for CFO Talent in the Bay Area

red-hotThe market outlook for CFO talent in the Bay Area is red hot in 2014. We expect this trend to continue for a variety of factors: the IPO market continues to be open in most industries, the aging nature of our population headed to retirement, and the lack of a deep talent pool of experienced public company CFOs. As the broader economy in the U.S. continues its crawl out of the great recession, the tech-heavy local market has been expanding for the last two years. Certain sectors do seem overly frothy, but time will tell. Clearly this is not another dot-com bubble, but what goes up, does come down. With the global and national markets on the mend, there is more growth opportunity for technology companies and more pressure on the talent pool both locally and nationally.

Ruling out some sort of global calamity, we expect the market to remain very tight in the Bay Area, and expect other markets to tighten with the improving economy.

Increased Competition for Talent

So if you are a company seeking a CFO with public company experience or specifically IPO experience, what can you expect? The fight for talent is intense. Be prepared to pay more than you planned, be ready to move quickly when top talent is in front of you, and keep an open mind to creative solutions. Recently we a recruited a sitting public company CFO out of his current role for a client ready to IPO; fortunately our client was attuned to all of the advice above and made a compelling offer in a timely manner. Of course it is always much more than a financial decision─the courting process made sure of a good fit between CEO and CFO and the team as well.

Advice for Companies Looking to Hire a CFO

It is always the case that the number of “A-Players” in a given market is finite, and the number who want to make a change is also finite and shrinking. This is where creativity can come to play. Thinking outside the specific industry confines, or bringing in the “A-Player” step-up candidate are two possible alternatives to calling the same five industry-leading CFOs in your space. Sometimes the “Best Athlete” model is the right one in a tight talent market.

Advice for CFOs

If you are a sitting public company CFO you are getting calls from people like me. In the Biotech sector, a public company CFO told me a couple of weeks ago that he is getting an average of three calls a week. He said the only reason he called me back was because of our relationship spanning over the years. If you are a CFO without public market CFO experience, how do you get it? The key is to work under a CEO who has been in the public limelight. Investors, both private and public, don’t like it when both the CEO and CFO are without public company experience.

Clearly, whether you are a hiring company or CFO candidate, having a dedicated resource that is focused on the role of the CFO is in your best interest. A CFO recently told me, “You know Dave, the reason I like working with you is because you think and talk like a CFO. It’s really great the way you size up your client opportunities and are able to present them to me in a way that highlights all the things I’m concerned with.” It was a kind comment, but instructive too; if you are a company seeking a CFO you want an expert on your side. And if you are a CFO with too few hours in each day, you want a search partner who understands what’s important.

It’s going to be a long hot summer that will continue into the fall. To be prepared and keep cool, call Dave Arnold at 408-205-7373 or email me at Dave@arnoldpartners.com.

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CFO Search: Quality vs. Quantity

qualWhat are the most important factors when embarking on a CFO search? More importantly, what are the most important qualities you should look for when hiring a search firm to help you hire a CFO? Three quantitative measures are frequently cited as the most important: time to completion, longevity of the placement, and re-placement rate.  I’ll give you my perspective on these measures based on many years as a CFO search consultant.

CFO search begins with a clear target

The process for a CFO search, or any search for that matter, must begin with a very clear understanding of what you are searching for. Fortunately when it comes to CFOs and Audit Chair Directors, the definitions are usually pretty crisp. Nonetheless, there are critical subtleties in the definitions for CFOs, the culture of each company is different from that of another, and the blind spots of CEOs will differ. These considerations must be weighed and sorted, so at kick-off we have a strong, common understanding of the specific must-haves and nice-to-haves.

Because of our long-time focus on the financial function, helping clients define what is needed in the role is second nature to Arnold Partners. We act as a management consultant specializing in executive search, adding value from day one, even in the pre-search process. The average time it has taken us to complete searches in the last year is just under three months, proof positive that this value creation also has the benefit of saving time as well.

Watch out for too much speed

bestSpeed in search is important to most clients at the onset because some event is pending, or the client realizes that the decision to hire a CFO should have been made months before. Perhaps a budget was blown, or a market shift could have been anticipated if there had been a CFO in the seat.  But moving too fast may result in a hire that doesn’t stick. Then you are back to the drawing board. After digging back into all of the CFO searches I have completed, I am proud to report that the average tenure of the CFOs I have placed is 38 months. This includes a number of placements where the companies ended up getting acquired in fairly short order. Of those companies that have not been acquired and are still in operation, the average tenure is 48 months. These CFOs are sticking in place because time was correctly invested.

So the averages are good, what about the mistakes?

Nothing is more demoralizing and costly than a bad hire. A bad executive hire is even worse. Can you expect success on every search? You can if you choose the right firm. To date, Arnold Partners has a 100% success rate, meaning the CFO was in place for a minimum of a year.  We have been rehired to conduct replacement searches twice – once after the CFO was on the job for three years but developed a health issue, and once because the client moved from Seattle to the Bay Area.  As we guarantee our work for a year, we are proud to say we have not had to employ that guarantee.

In Sum

Every CFO search firm should have a score card on these three measures.  If you like our top marks for quality, speed, and longevity, call me, Dave Arnold at 408-205-7373 or email dave@arnoldpartners.com.

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How to Hire a CFO: Process vs. Results

I was in a client meeting this week and was taken aback by my client’s view of retained search professionals. Maybe he was burned a few times by executive search firms?  Not sure, but out of our conversation, what differentiates my firm Arnold Partners from most other retained search firms became clear.

While at an investors’ conference the week prior, my client ran into a partner from a large executive search firm and they got into a debate about the relative value of the search process vs. the outcome of the process. The search exec. stressed the value of the process and the insight gained, but could not sway my client; the only value he saw in the search process was the end result – a great hire.

Gems gleaned from the process

I agree that the search process itself can provide a great deal of valuable information to a company, specifically discoveries about how the company is perceived by the professional community and how the specific role is received by the potential candidate pool. These are truly important things; the candidates you are seeing and the prospective candidates your search partner is approaching are not yet “drinking the cool-aide” as we like to say here in the Valley.  If the response to the company story is not positive and needs to be re-tooled, this is valuable insight especially when the story is being presented to CFOs, who are by their nature conservative and a tad skeptical, in my experience.

Beware the purple squirrel

purple-squirrelAnother possible discovery that can be a real show stopper: the person you are looking for does not exist!  I have heard this called the unicorn or the purple squirrel. This is a frustrating discovery, but it can also provide insight for the executive team and board.  If the specification for the role is too far outside the lines or tries to combine too many “must-haves” there needs to be a reconfirmation with the search partner and the client to reassess the needs of the business and the goal of the search. I like to say, “In search, you cannot find what you are looking for unless you know what you are looking for, but, if you are looking for a purple squirrel, you may be looking forever!”

Where the rubber meets the road: completion and stick rates

My view is that process is important and discoveries can provide insight, but the real drive and goal is the successful hire ─ to find a CFO that who will create a lasting, positive impact for all stakeholders in the organization.  A process without consummation is a failure. This is where I pride myself in our 100% completion rate. Yes, searches can be tough; in fact most of them are. But for the best outcome what should a CEO or VC look for in a search partner? Two metrics: completion rate and stick rate (how long the placed candidates stay in the roles). One national firm boasts on their website of a 77% completion rate, which means they do not complete 23% of their searches ─ almost a quarter! And yet their clients are out 100% of their fee for service.

If you are contemplating how to hire a CFO and  seeking a search partner for your search, you will find Arnold Partners to be 100% committed to both a useful process AND a successful outcome with long-lasting results. If you would like to share your experience on how to hire a CFO, or want to learn more about how Arnold Partners hits its numbers, call me, Dave Arnold at 408-205-7373 or email dave@arnoldpartners.com.

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A Primer on Master Networking for Job Seekers

mrbigBeing in the search business of finding great CFOs for my clients, one thing rings true each year: CFOs along with everyone else make New Year’s Resolutions – including finding a new role.

The following is my primer, for not just CFOs, but anyone seeking new employment from a recent college grad to a CXO, on how to network so you can find a meaningful new career seat this year. I have given this advice to many over the years, and from their testimonials, I know it works.

Determine your criteria

The first step is figuring out the criteria for your next role. If you’re a recent grad that might be a job, period. If you’re a CFO who wants to get into a new industry, well that’s a lot more involved. However, the following guidance is applicable to any change including changing industries, getting your first Board seat, or a position at a faster growth company.

Identify and get in front of the influencers in your network

Next, write down the top 20 people in your world that are people of “influence.” These could be investors, lawyers, bankers, CEOs, board members, professors, audit partners, former bosses, or peers/classmates who may be just a step ahead of you. Brainstorm hard on this. Think outside the box. Once you have 20, rank them from most influential to least. Your goal is to have a face-to-face meeting with the top 10 people on your list over the next two or three months, depending on your urgency and work status. (Note, I didn’t include executive search consultants on the list of influencers.)

Come up with a game plan that makes sense for you. If you’re currently employed, maybe one meeting a month is realistic. If you’re actively seeking work, maybe one to two a week will do the trick.

Set goals for the meeting

Ok, so you get a 1:1 with Mr. Big or Ms. Big, now what?  First off, you’re NOT THERE TO ASK FOR A JOB. You’re there to express appreciation for his time and how he has influenced your career to-date, and to tap into his network. Unless you’re particularly close with this person, you should ask for only 15 to 30 minutes, and don’t exceed what’s agreed to.

Your goal is to get introduced to one or two of the people of influence in his network. Obviously, you’ll need to explain why you’re there and that you’re considering a change, but be very brief in explaining who you are and what you bring to the table.

It’s critical that you ask Mr. Big who he knows IN THE SPECIFIC INDUSTRY you’re trying to get into. Consider these two dialogues:

You: “Hey, Mr. Big, I was hoping you could refer me to someone really important in your network.”
Mr. Big: Blank stare.

vs.

You: “Hey Mr. Big, I’m laser focused on getting into the software industry for my next move. Who are the two people you know in software that you would feel comfortable introducing me to? Perhaps there is a CEO or an investor in that industry who you know?  I’d like to get a 15-minute meeting like this one I’m having with you, with one or two well-placed folks. And a word from you would be of immense help in getting those meetings.”

THE MINUTE YOU GET BACK TO YOUR OFFICE WRITE A THANK YOU NOTE TO MR. BIG. You can do this via email, but if you have good script, a hand-written note is a remarkable thing in today’s digital age. Ask him to keep you in mind as he travels the hallowed halls of wherever.

Keep your own scorecard

OK, so your goal is to get 10 meetings like this, which will lead to 10 or perhaps 15 or 20 more meetings if you are successful. The frequency of meetings is up to you, but stay with the plan. Keep checking your list of influencers. Be persistent without being pushy. Follow up with the original influencer to let them know you met with his referrals. Keep the circle of communication going. Reward yourself in a small way with each meeting. Make it a game to reach the highest placed people you can. Be honest with yourself and your goal, just like any resolution. Know your strengths and be crystal clear to the influencer who you are what you bring to the table. Be mindful of time and of follow-up.

If you do this well you’ll be in a position to hear about opportunities before they are posted, before they go to search, before someone even knows they need you. So happy searching! I welcome your success stories and comments. Contact me at Dave@arnoldpartners.com.

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