Interviews at The Entrepreneur Center @NVTC

An Interview with Jeremy King, Managing Partner, Austin McGregor
June 12, 2006

Executive recruiters face changing fashions. One year clients may be looking for CEOs to fix their companies, and the next year business development experts. Jeremy King, managing partner of Austin McGregor in Washington, an executive search firm with five national offices, has seen the wide swing in recruiting since joining the firm six years ago. Regardless of the need at the moment, King looks for talent in the same way, tapping into a database of executives and his network of contacts, and then making lots and lots of phone calls. The firm has clients such as Compaq, Dell, EDS, Managed Objects, and Cisco. King, 36, opened Austin McGregor’s Washington office in 2002. At the end of that year the founder of the firm retired and King and another partner bought out his shares of the firm. He previously worked with DHR International, another search firm; did sales and business development for Erol’s Internet; and originally founded a consulting firm to do fundraising for charities. He has a BS in political science from Florida State. Everyone knows the big firms like Korn Ferry, Heidrick & Struggles, Spencer Stuart, and Russell Reynolds. Tania Anderson of Bisnow on Business went exploring a smaller one.

Tania Anderson, for Bisnow on Business: What kind of searches does your firm do?
We do C-level searches, such as CEOs, CFOs and CTOs. The sweet spot is companies in their A and B rounds of financing, in the range of zero to $50 million in revenues. We also do VP of sales and marketing and business development searches. This year it could be anything. We also work with large companies that have contracts with the government, either doing VP of federal sales or VP of business development or a president of U.S. operations.

What have been some of the hottest executive searches since the bubble?
In 2003, the biggest trends were CEOs and VP of sales searches. It was boards of directors replacing non-performers. They were looking at which portfolios companies they were going to commit and back for future years. As the companies scale, it’s a different executive who can go from zero to $10 million in revenue versus $10 million to $50 million. In 2004, we got calls mostly for sales and marketing. These were firms that survived the bubble. They had customers and revenues and were looking now to scale. Last year was more engineering, product managers, development and CTOs. What that told us is these were companies that survived and were developing next generation product lines.

What about this year?
CFOs and vice presidents of business development. We’ve done a dozen of these searches, and we hadn’t even done half those in the last five years combined. What we focus on is pretty much what the investors call on. Also we’re seeing a lot of VPs of federal sales, and GMs of U.S. operations or federal GMs. The government continues to be a pretty hot vertical. These are either commercial vendors who focus on Fortune 500 companies who also want to see to a new vertical, or government IT services companies looking to scale. They’re now bringing on new senior executives to focus just on federal. Another trend we’re seeing is boards of directors and advisors for both commercial and federal companies. A lot of companies are not just looking for credibility but actual content from these leaders who have done it before to help position them for an exit or an acquisition.

How have the industry or skill sets changed in the searches?
It’s still largely software services and telecom. The skills haven’t really changed all that much. They’re focusing on similar markets but just new approaches. Open source is a hot trend. That didn’t really exist four or five years ago in a big way. It’s people who had been at startups and who had been successful and demonstrated that success by taking a company through an exit. The heavy lifting that goes on at a startup has been the same forever.

How do you find people?
People have asked me this question for 10 years. The business is a mystery. At least for us, the process is not rocket science. It’s a lot of hard work. You have to make hundreds of calls per search. You have to reach outside of your collective network of known players who are in the databases and also those known by investors. We found almost 1,000 searches in the last 20 years and we have a near 100 percent completion record. Through research we go find those leaders who did the job and then go find where they are now. We’re selling the best candidates why they should look at our client’s opportunity.

How competitive is it right now for talented executives?
There’s always been high demand for A-players despite the market cycle. From the bubble, most of the executives that hit it big, whether they were at the VP or C-level, they’ve taken time off. The majority of those are back to work. It’s incredibly competitive, so much so that there really is a lack of local strong talent. We’re having to go to other markets - Atlantic, Boston, Dallas - to try to relocate executives. We’ve had success doing that.

What is your biggest challenge in doing this work?
Really the challenge is people are happy where they are and they’ve made commitments in the last year or so, taking on a new opportunity. A lot of people want to see that through and would be judged by headhunters in the future if they flipped jobs every year. A lot of people are staying put but that’s why we’re hired in the first place. If you have something of value, meaning our client’s opportunity, there are few people you can’t get to. Our job is just to articulate that opportunity. They’re either potentially interested or they’re not. If they have some interest, we’re going to push for a meeting with our client.

Austin McGregor is small. How does that affect your practice?
At most of the larger firms, the mandate is the bottom line. The most senior partners there typically get involved more in business development, bringing in new clients. The search is handed off to research and typically a more junior consultant makes the majority of the calls to candidates, whereas we focus all of our time and make all of the calls. Another difference is the larger firms are conflicted because they represent so many companies, there’s a blockage issue, meaning you can’t recruit from clients or former clients for a certain number of years. We’re small and nimble and have very few blockage issues.

How long is the process of finding an executive?
Our average search is started and completed within two months. That’s all dependent on the client’s ability to make time to make this a priority.

It even takes two months to find a CEO?
If you have something good to sell with the right ingredients, then yes.

What's the difference between a retained search and a contingency search?
A retained search is exclusively conducted by one firm and is usually done for higher level positions. That's what we do. A contingency search would involve several firms and they get paid only if they produce a candidate who gets hired by the client. Contingency searches are usually done for mid-level or lower-level positions.

How do you judge if a person is going to be a good CEO?
You judge if they're good in two ways. One is their history of success which is easy to check out. You not only look at their resume but talk to people in our network such as investors who may have had that executive in a portfolio company before or other executives who may have worked with them. The next step is a question of their interest which is always challenging. We ask them what else are they looking at, where would this opportunity rank for them, we look at their excitement level and if they say things like, "I've told my wife about this" or "I've started to write a business plan for this company." If they take the time and effort to go to their own network and do diligence on the opportunity, that's a really good sign.

You've mentioned your network a few times. Who's in your network and how many people make up your network?
Hundreds of thousands of people. Certainly the VCs because it's a finite number, but also senior executives, VPs and people at every C-level function and board members. I've been involved in hundreds of companies over the last 10 years and I talk to at least 100 people for each search. That's an awful lot of executives that you go through over the years. We are continuing to add to that network and enlarging it by going after new executives.

How often do you turn down a client?
Probably two out of 10 times where we don’t think it’s a strong enough deal to sell to the types of people they want.

Are companies doing anything unique or innovative in terms of luring some of this talent?
For a larger client, they gave away a BMW for someone who could refer a certain number of people with clearances. It’s getting pretty creative.  :)

[This interview conducted by Tania Anderson for Bisnow on Business.]