I had a client last year that kept falling in love with candidates he could not attract to his company. There was nothing wrong with his company; in fact, I think it will prove to be very successful. However, it was earlier stage than some CFOs want to get involved with. The CEO is a compelling, passionate, smart guy and frankly I think he could sell anything to anyone. But CFOs are a different breed. They do not like to be sold. They think more like engineers—the numbers drive their decision making.
Meet Mr. Amazing: A Great CFO Hire?
This client was easy to work with—he was communicative, open, and we really got some great talent to the finish line. But it was just not closing. There were some internal delays. The candidate who was considered perfect wasn’t so perfect after a long health delay. So along comes a great CFO that the CEO considered the “most amazing candidate of all time!” This candidate looked great on paper and was coming off of a big win in the industry. He was known to the Board and it was thought he would bring an air of success, credibility and celebrity to the company. Now you can guess, my client was ready to hire; there was some fatigue on his part. And hire he did against some objections from me, but mine was a lone voice in the crowd. He hired this most amazing candidate start to finish in about a week.
Four months have passed and the most amazing candidate of all time has quit. The IPO has been delayed. The commute was too far. When the going got tough, the one with all the credentials on paper got going—right out the door. The CEO and the Board’s judgment became clouded when they got caught up in a moment of euphoria, and they rushed the process at the end. The right hire is in the wings and there will be no replacement search necessary, but now the client has a different type of credibility gap to fill.
Mr. Carve-out Wasn’t Carved Out for the Job
A recent client was a very different tale. He was extremely decisive and thought he knew what he wanted before he engaged us. He had one great CFO candidate identified that we carved out of the standard fee. My client met with a total of three candidates in our process and decided Mr. Carve-out was right. We made him a fair and market offer but he said no. Mr. Carve-out was also was coming off a big win and I believe he is really looking to be a CEO not a CFO. This was not the right hire and I was relieved that he turned us down. It could have been a repeat of the client story above. Had the “most amazing candidate of all time” resigned prior to our making the offer to Mr. Carve-out, I would have been even more strongly against that hire.
Enter Ms. Moneyball
Ms. Moneyball is what the Board member who introduced me to the search called her. She is hungry and has all the skills and stats, but is not a proven commodity. Like Matt Duffy vs. Pablo Sandoval. (Look how that is turning out!) The offer we made to her was the same as to Mr. Carve-out, so the Moneyball analogy does not completely fit. I would not have my client hire a woman for the job for less than what he was going to pay a man. The key point is that she is the right hire for their stage and will actually do the work that “the most amazing” and “Mr. Carve-out” would probably want to hire staff to do. She is an “A” player in terms of the skills and experience we were looking for; she just did not have the CFO title. If and when the times get tough, she will fight through them. She is smart and driven and will work very hard to ensure the company success. This search was completed in 40 days start to finish.
Lessons Learned
Don’t be fooled by a big reputation. Skills, smarts and potential are more important and a rigorous process should not be rushed. Clients take note: I will be more forceful in my advising in these situations in the future to get you a truly great CFO. If you would like to share your own stories or to discuss hiring strategies, please contact me, Dave Arnold, at: moc.srentrapdlonra@evad.
The Silicon Valley Business Journal ranked Arnold Partners #10 for number of placements (11) made by executive search firms in the Bay Area for 2014. The firm, which specializes in CFO searches and Board searches, was ranked #23 in 2013.
An active venture investor and client told me about a conversation at a board meeting he recently attended. The question was asked, “Does anyone know any CFO recruiters?” Everyone around the table said yes, but not anyone they would use again! This is where the growth and success of Arnold Partners differentiates us from other executive search firms. All of our clients in 2014 (and continuing in 2015) were from previous client relationships. Whether it is a relationship with an investor, former CEO or CFO, we maintain our standing in the marketplace because we consistently deliver results.
The new rankings of the Business Journal are all about integrity. Many of the firms listed in previous years did not submit their placements for 2014 because for the first time the Journal validated the numbers. For each placement we had to submit the actual client name and the person we placed. But no problem for Arnold Partners; we have nothing to hide. We never inspired to be the biggest firm—in fact our small size is part of our appeal. But we do what we say we will do, and in looking back we are proud of our results and are happy to share them.
Arnold Partners Track Record for Placements Continues
We are on track to perform as well this year as we did last. The market in Silicon Valley remains very active for CFO recruiters and the supply of top talent does not seem to be getting any easier to find. The market does not seem to be overly frothy as some are speculating. It seems to us that the market is healthy across a wide spectrum of industries with real revenue and real customers and real growth. We are engaged in searches from manufacturing, SaaS, BitCoins, Medical Devices and Biotech and the Internet of Things.
Our laser focus on CFO and Audit Committee search results in timely searches with lasting results, and we are committed to taking on a limited number of searches at any given time. As a result, the name Arnold Partners is being bantered about in more and more board rooms when there’s discussion about what executive search executive to call. We thank our clients for the trust you show in us. We value our relationships with you above all else.
…”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.
