May 25, 2017 – For leaders of executive search firms, involvement in the industries they serve, whether it is by holding a seat on corporate boards or other contributions, can pay dividends in more ways than one. Among other benefits, it is a way to stay up to date and intimately involved in the culture and goings on at client companies and their sectors.
“I sit on the board or advisory board of perhaps two dozen emerging growth businesses,” Jay told me in a recent interview. “And through involvement with several venture capital firms as a limited partner and advisor, I am exposed to north of 60 other portfolio companies. So we are incredibly plugged into this space. As such, we are well positioned as thought leaders in the executive recruitment space with respect to frontier technologies.”
Pent-Up Talent Demand
Technological transformation is of major concern to virtually all of his clients, he said, regardless of their sector. All of them are seeking access to the latest technologies and to better understand new models, new interfaces and new ways of doing business. To say nothing of keeping an eye on digital disruption threats that may be looming in the future.
“There is a pent-up demand for talent in these areas that is only going to explode further as the world transforms,” Jay said. He told of seeing a strong spirit of technological innovation in his work across North America – in Silicon Valley, New York, and Toronto, to name just a few places.
But digital transformation – and the business endeavors that come with it – goes beyond borders. In Israel recently to meet with tech professionals, Jay spoke of being approached with potential opportunities. “There is a significant level of excitement in advising many of these companies and of course talent management is crucial,” he said. “To see them grow and flourish is a real treat, and ultimately this work is high integrative to our fundamental business as search professionals.”
One of Rosenzweig & Company’s key market advantages, Jay said, is that it has one of the deepest innovation networks in executive search. “We have connections throughout North America, and globally, in frontier technology and digital transformation, whether that means founders on high profile start-ups, digital, mobile and social media pioneers and innovators, prominent technology investors or other experts in innovation,” he said.
Talent and Strategy Go Hand-In-Hand
As head of an entrepreneurial firm, meanwhile, Jay is free to engage early-stage companies in ways that partners at the big global executive search firms, for example, cannot. And though his relationships with start-ups typically begins with talent and talent management, it soon moves into other areas.
“Talent and ability to access people dominates everything that an early-stage company does,” Jay said. “Talent and strategy are often indistinguishable. And so we have often been able to help these companies secure additional investment or access senior business leaders and CEOs in marketing their products, and have been able to provide advice in terms of strategy and operations that was deemed to be valuable.”
A central focus in Rosenzweig and Company’s engagement with such ventures is to help create top-flight organizations through finding the best talent. But the firm also serves as a key advisor in terms of operations, strategy technology commercialization, capital raising and building connections.
Why Timing Matters
As an example, Jay pointed to his firm’s recent work with Hyperloop Transportation Technologies, a high-speed transportation system originally proposed as a concept by Elon Musk, the founder of Tesla.
“Every assignment poses its own challenges, but I think working with companies that are moving from the start-up or launch phase to a fuller organizational build-out is challenging,” Jay said. “There is always the question of timing – am I bringing on too much overhead too soon? Or too late? Will new hires change our company’s culture? How do we properly compensate new senior hires when we have yet to show we can produce sustainable revenues and profits?
“In these instances there are no cookie-cutter solutions; each company is different, with different needs. That’s why we work so hard to understand the client’s culture and business environment. It’s hard work, but it is hugely rewarding to help a company successfully scale up at the right time and with the right people.”
Typically, Jay said, he is compensated broadly as an advisor. He receives equity positions as an advisor and he invests now and then. If the entity is large enough, he may receive both cash and equity. Depending on the size and cash position of the company, he may get only equity.
“As a boutique firm, we have that flexibility, which is useful in this space,” he explained. “Hyperloop Transportation Technologies, for example, developed a crowd collaboration model, which led us to agreeing to work in that case for options.”
Early stage high-growth businesses provide unique challenges in terms of talent, he said. Oftentimes, companies simply wait too long to add the executive talent they need. Having the right people at the right time can make all the difference in the evolution of a business.
“Timing is absolutely critical,” Jay said. “Very often the first significant hire is the VP of sales or chief technology officer, but it really depends. The trick of course finding the right timing – and the right person or persons. If you add talent too soon the costs might outrun your funding. But finding individuals who are the right fit, culturally and in terms of skill-set, typically takes time; these will likely be the most important hires you will ever make. The ability to anticipate when you’ll need to make a talent acquisition move is also critical.”
Checking Ego at the Door
There are also sensitive issues around effectively supporting the founder or founders of a new company. Start-ups can be complicated, Jay said, and come with certain paradoxes. “They typically benefit from having a yard-driving, entrepreneurial leader – a person with enough ego to launch a new venture, often against real odds,” he said.
“When they start to succeed, this only tends to reinforce their self-image. In reality, at some point the leader of a successful, growing company typically has to accept the fact that he or she can’t do everything. They need to learn to check their ego at the door and see that the ability to accept help is a strength, not a weakness.”
Usually, a big corporate executive-type is not the person one wants to run a start-up or a small company. And it is not because they lack talent, but because they are used to operating in a much different environment. Such leaders are used to having access to vast resources, including capital, human resources and all kinds of technical and logistical support.
“With small companies, you are looking for someone with an entrepreneurial mindset,” said Jay. “These individuals typically are looking for less base salary, for example, and more up-side potential. They embrace the idea that they are going into a higher-risk environment with an opportunity to more fully share in the company’s success.”
Going forward, Jay considers the extended work he does with client companies as possibly the most critical aspect of his work as a search professional. All of his clients, as he said, face opportunities and threats from the technological revolution.
He told of being approached recently by one of the largest corporations in the country, which was seeking key talent as an answer to advanced technology issues. “It is a very sensitive search,” Jay said. “They are not getting good results from the alternatives they are using. And they came to us in frustration because of our experience in this area, and because of the clear profile and depth we have in the emerging technology arena.”
In all sectors, the traditional markets are changing profoundly, Jay said. The challenges they must confront in regards to massive digital transformation runs through the executive search business. “That is true not just for the private equity & venture capital firms we work with, and their portfolio companies, but for traditional companies of all size in every industry,” said Jay.
These are undeniably challenging days to be in the recruitment industry, Jay said, but thrilling ones as well. “Whether you want to talk about digital disruption, transformation or full-scale revolution, it is a hugely exciting time,” he said. “I really can’t imagine a more fascinating time to be in the search business. The things we are witnessing now, what we are doing now, will thoroughly transform the world in the generations to come. That is certainly exciting. It is extraordinary.”
Contributed by Christopher W. Hunt, Publisher and Stephen Sawicki, Managing Editor — Hunt Scanlon Media