April 15, 2015 – Increasingly, top consultants at large search firms are breaking ranks and setting out to build and develop new brands in unique ways by embracing cutting-edge strategies to best serve a demanding client base. Once partners with Top Five search firm, Heidrick & Struggles, Brad Stadler and Joe Riggione, who co-founded True in 2012, are leading a dedicated team of consultants which has catapulted True to the 16th largest among U.S. search firms. Today they are working with some of the most innovative private equity and venture capital firms in the world. In the following interview they discuss their strategy and why they decided to set out on their own.
ESR: Why did you form True in 2012?
Stadler: We believed that we could better serve our clients by creating a new platform that incorporated a data component and focused on efficiency. We had several ideas about how to elevate the overall search experience for clients and candidates but it was very difficult to execute those ideas within a larger firm. It was also important for us to develop global reach and expand our search offerings below the C-suite, which we’ve done with our sister company Foundation Talent.
ESR: You sold your firm, Iron Hill Partners, to Heidrick & Struggles in 2008 and worked in a large firm environment. Why did you initially sell Iron Hill to Heidrick?
Riggione: The exit opportunity came at the right time considering the scale we’d achieved with Iron Hill. It was our first venture and we were proud of what we’d accomplished, but we were young and still had a lot to learn. The acquisition was financially meaningful to us and Heidrick was a good fit at that time and proved to be an important part of our broader vision.
ESR: True is comprised of partners who once worked for larger firms like Heidrick & Struggles. What benefits did the large firm experience bring to you and others who had this background?
Stadler: Larger firms like H&S have been leaders in our industry for years. They do a lot well, including training the next generation of recruiters. In that environment, you fine-tune your professional goals, likes, dislikes, principles and ideals. However, there are some systemic issues and limitations that hinder their ability to consistently serve their clients well. A global platform can be great, but large firms have to be so focused on revenue growth and that can get tough.
ESR: Do you think a firm like True will have a competitive advantage in the future given that larger firms are perhaps getting too large and perhaps failing more often?
Riggione: What really matters, from our point of view, is a firm’s ability to focus and specialize in certain areas. We don’t believe large generalist firms can do this well, so in that regard, mid-sized firms do have an advantage. For example, today, we serve clients throughout North America and EMEA within technology and life sciences with a high level of service and market knowledge and that’s where we’ll continue to focus.
ESR: True works with a great many venture capital and private equity firms to identify talent for their portfolio companies. What are the nuances in working within this sector?
Stadler: There are many nuances to these two areas. In most cases, VC firms are most interested in an executive’s experience within high growth or disruptive markets. Many PE searches require candidates with more scale and operational discipline. In 2014, 15 percent of our searches were with public companies and we believe that percentage will continue to grow. Many public companies are looking to recruit executives with entrepreneurial experience to help fuel innovation. With respect to candidate pools, we find that there is good synergy across these markets.
ESR: True is not a large or even boutique generalist but, rather, a mid-sized firm that specializes in certain, key industries. Why were certain disciplines selected and do you feel it is better to be a mid-sized firm that focuses on a select number of disciplines versus afirm the same size that is considered a true generalist?
Riggione: Again, we believe in a focused approach. Markets that have similar characteristics make the most sense to us, which is why we have chosen technology and life sciences. Both of these markets are disruptive, growing, and have received significant investment. We believe this will continue even in down market cycles. They also happen to be the two areas that we are most personally passionate about.
ESR: How does True develop a brand that is unique and thus how does it differentiate itself from other firms?
Stadler: For us, this comes down to three things – a transparent, data-driven approach; a global footprint that focuses solely on tech and life sciences; and a team of outstanding professionals who value substance over salesmanship.
ESR: Search firms today look and feel very differently than in the recent past when all were essentially pure-play search providers. Today many firms are more full service human capital providers than in the past. How is True responding to this shift in structure?
Riggione: Yes, many firms are adding services and capabilities as they look for new ways to increase revenue. In our view, however, this is primarily a large firm trend and not the best strategy for us. For now, we prefer to focus on our core strength while adding capabilities that enhance the total search experience. Whether that’s better culture assessment tools or fine-tuning an industry leading talent management platform, our expansion plan centers around a mindset towards better client service.
ESR: Do you think there exists inherent conflicts of interest when search firms are offering ancillary services in conjunction with traditional search services?
Stadler: There certainly can be. If the ancillary services dilute the focus from core search, then there is a genuine conflict of interest. That said, if a firm can figure out a way to add CEO coaching or leadership assessment, for example, while still delivering excellent searches, then we see no issue.
ESR: Do think there will be more boutique firms or mid-sized firms like True in the future? There have been many more firms putting out a shingle in the last five years than ever before. Does this surprise you?
Riggione: No, it’s not a surprise at all and there are a couple of factors at play. First, there will always be entrepreneurs who are frustrated by large platforms and pursue their own venture. Also, today’s vibrant capital markets have created great opportunity for both large and small firms, so new firms are increasingly likely to emerge. However, it will be interesting to see how the landscape looks five years from now…anyone can hang out a shingle, close a few searches a year, and perhaps build to a team of two or three people. The real difference makers and value drivers will find new ways to improve search and be around a lot longer.
ESR: Because True is your own brand there is more at stake in client situations. But, on theflip side, there must be a greater level of satisfaction that this structure is working because you are the ones driving it with your vision?
Stadler: The whole idea of entrepreneurship is based on the huge amount of risk that comes with starting something new but at a greater reward, so yes that’s true. Having said that, we always thought the risk was worth it. There are so many opportunities to improve the industry whether that’s finding better ways to assess culture or incorporate technology into the search process and for us, the only way to contribute to making the industry better was to go out on our own.
ESR: Hunt Scanlon Media is publishing a major study on in-house recruiting this year. What do you think about the shift by many companies to use internal recruiters to conduct their own search assignments and have you seen any affects on your business? What effect will this have on the retained part of the industry and at True?
Riggione: We don’t think the shift will impact us. There will always be searches that can be easily handled in house, but ultimately, every company has limitations around network, reach and resources. There will always be a need for search firms with excellent service, and a great network and platform. In fact, many of our clients, either corporations or venture capital firms, have an internal talent professional on staff. We work with them all the time because there are certain searches that just don’t make sense for them to work in house. The search industry works across multiple verticals and multiple roles…we’re a mile wide and a mile deep. They’re an inch wide and a mile deep; those inherent limitations are just unavoidable. That said, firms like ours must innovate and evolve to find new ways to add value.
ESR: How much time do you and your partners/associates spend in gaining an under- standing of a client’s culture? In your view, how critical is this?
Stadler: It’s extremely important. In fact, we’ve engaged a team of cultural anthropologists to help us develop a scientifically-based model for assessing candidates. How will a candidate “fit in” to an existing culture? Will he/she be able to lead a culture change if necessary? This is one aspect of the search industry that needs to be torn apart, rebuilt, and become more effective. We’re hoping to help solve that problem with a rigorous, credible tool that improves hiring decisions.