…”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 the new CFO of Google in the Los Angeles Times.
Dave Arnold has plenty to say about a wide range of other CFO-related topics. The new CFO of Google having a non-tech background could be a sign of them preparing to shift their brand, a topic that Dave discusses in more detail in his Reinventing Your Brand for CFOs post. In fact, here at Arnold Partners we have a history of connecting tech companies with CFOs that maybe the companies didn’t consider in the first place, helping both them and the candidates to create a powerful relationship that allows both to succeed. Dave learns from masters of all different business industries including the culinary industry, as you can see in his Secrets from a Chef post.
For more information about Arnold Partners and how we can help you and your business, visit our About page or call today at 408-205-7373.
The realization I had last fall about the typical executive search process being outmoded was a real thunderhead because it struck me like a bolt of lightning. Working in the vacuum of weekly Excel spreadsheet updates for clients felt so 90s! One client challenged me to find a better way to convey information about candidates and the search pipeline. As luck would have it, I received an email solicitation from a Cloud-based SaaS company offering a new recruiting technology specifically tailored for the executive search industry, and within a week I was signed up. Not just a handy tool to make the search process run more smoothly, this tool has completely transformed how we at Arnold Partners deliver our services to our clients.
Given that all of our clients are in the technology industry, it made sense for Arnold Partners to adopt an advanced, technology-centric approach to our recruiting process. By using the services from Clockwork Recruiting, our entire process is managed in the Cloud ─ from pre-search to closing. The system enables complete transparency for our clients so they can see the efforts going into the pipeline and next steps with candidates in process. In addition, the reporting capabilities are swift and to the point.
By leveraging the Clockwork research services we are also able to jumpstart our searches by populating the project with potential candidates, right from the get go. We then combine this research with our existing database of established relationships in the CFO community. (Note, we do not have anyone contacting potential candidates other than myself, which is a central tenant of our pledge to clients.) This one-two punch has led to even faster delivery of qualified candidates for our clients.
Shared Workplace Gives 24/7 Access to All Information
The Clockwork system allows for all information about the search and specific candidates to be housed in a location which is both secure and accessible from any computing device 24/7. This makes for a great user-interface. Also, if a candidate is coming in for an interview, clients do not have to scramble to find an email with our assessment notes and resume ─ it is all in one secure spot. As we populate the records with more and more data, a very clear picture emerges, enabling us to presenting information to a search committee or Board of Directors in a clean, professional, customized manner.
This post may sound like an ad for Clockwork, but that is not my intention. Using this platform levels the playing field and makes Arnold Partners an even stronger competitor to larger executive search firms. As my advisor Howard Bain pointed out to me at our last meeting, he was very frustrated with a large search firm he was working with on a CEO search. He said the biggest frustration was lack of visibility to the search progress. That will never be a concern with Arnold Partners ─ we are all about delivering our services in a transparent and easy-to-use manner. As we kick off another busy year, we are moving forward confidently with this improved process to help our clients succeed in finding outstanding CFOs and Audit Chairs.
I 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 moc.srentrapdlonra@evaD or call 408-205-7373.
I had the pleasure of sitting down with one of the all-time great venture capitalists last week. By working with him on four separate successful CFO searches and now a Board search, I have come to respect this individual more than words can describe. He has not needed to work for financial gain for many years, yet he remains committed to his partners, his CEOs and the community at large.
My guess is that he is in the top ten most successful venture investors of all time.
As we were wrapping up talking about the new Board search, I asked him some questions about how he evaluates talent. We always read that a company’s success is more dependent on the people than the technology, and I believe that to be true. I wondered whether his ability to spot exceptional talent was the key to his success. I am sharing his answers to my questions below; I hope you find the interviewing advice he graciously shared of value.
What interviewing advice do you have for evaluating a potential C-level candidate?
“The first thing I look for is their track record. Have they picked winners? What are their specific accomplishments within that track record─how did they specifically contribute to the successful outcome? It is OK if someone takes a risk on a company that does not work out, but I do not like to see a series of loser companies on one resume. In the case of a CFO, he/she may not be to blame for a technology failure, but they should be held accountable for being astute enough to pick more winners than losers.”
What are the most important questions you ask a C-level candidate when they get to you?
“I always ask: ’What is your biggest success and what is your biggest failure?’ If I get a lot of hemming and hawing on the failure question, that is a big red flag. We have all had failures. If you have not, then you have not lived and you have not worked in technology! I am looking for transparency mostly. If this person is going to be on a team with me, in a Board meeting with me, I need to know they can be transparent to what is happening in the company. If they cannot be totally honest with me in a first interview, then I have no time for them.”
What else do you look for?
“Preparation. They need to come to my office prepared. It shocks me that someone who has been through several meetings before getting to me is not prepared with really intelligent, well thought-out questions. Are you kidding me? They should know the company through and through and be asking really deep questions about the strategy and the execution of that strategy. If they are unprepared there is no excuse.”
Final Interviewing Advice by the Legend
Bottom line for this investor is that the interview is only good for so much, and he never relies on his personal impression: “Anyone can put on a good act for an hour interview and I have been fooled before.” He says there is no substitute for reference checking. 10 plus references on a CEO are typically checked, and perhaps a few less on a CFO. After doing venture work in the Valley for so long, he has access to just about anyone he wants for a reference, and critical hires are never made without talking to people that he trusts. This tidbit does not surprise me in itself. Checking references is obvious. But what is refreshing is that here is a guy who has hired 100s of C-suite executives and he still is humble enough to not trust his own excellent judgment! Who are we to disagree? Do not make a hire without checking on-list and off-list references.
Some key interviewing advice takeaways: if you are a C-suite candidate, your track record should include successful companies, significant accomplishments and people to back you up. If you are CEO or VC looking for talent, Arnold Partners strategic executive search will find you candidates with these winning qualities.
The 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 and how you can take advantage of the market outlook for CFO talent in the Bay Area. 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 knows how to read the market outlook for CFO talent in the Bay Area.
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 moc.srentrapdlonra@evaD.
