IVCA Profile Q&A: Ted Martin, Founder and CEO of Martin Partners L.L.C.

IVCA Profile Q&A: Ted Martin, Founder and CEO of Martin Partners L.L.C.

June 9, 2010

CHICAGO - “ Ted Martin has been a recruiter for over twenty years. IVCA tapped into Ted's unique perspective to get a perspective on our community's current challenges..

IVCA: Describe Martin Partners. What kind of clients do Martin Partners do recruiting for and what range of industry categories have you found job candidates for?

Ted Martin: Martin Partners has been recruiting for VC and private equity firms for 15 years.We serve portfolio company needs at the senior management level, and also recruit to the VC and PE firms themselves. We cover all industries and recruit for portfolio companies located across the country.

IVCA: How is the hiring environment signaling changes in the current economic environment? How does it compare to one year ago? Three years ago?

TM: The executive search industry went through its first real downturn ever in 2009. It started with the market crash in the 4th quarter of 2008, but we tend to be optimists so we were slow as an industry to cut people.2009 was down by 50% from 2008 for the industry, and large search firms are still laying off recruiters.2010 has come back, as companies hoarded cash and started spending again. If we don't get a major event lika a Spain crash or Middle East war or terrorist situation, the year will continue to be a good year.Not a great year like 2007, but a good search year.

IVCA: As a top recruiter for venture capital portfolio companies, what are the biggest challenges these company's face when recruiting executive talent?

TM: The - œquick flip-  is gone for a portfolio company.Everyone is talking long-term sustainable growth.So the big dilemma from a recruiting perspective is whether to spend money or not. If you lose a member of your senior management team, you obviously need to replace them.But what about the - œB-  player who is okay but not great?The macro environment means not spending money that you do not need to spend. You can keep going with the person in place, because in theory you do not need to spend on recruiting a replacement.

The dilemma is that long-term sustainable growth could be predicated on not having any B players in the senior management team. The company might go sideways versus up if you do not replace the B players with A players.The difference between a proactive versus reactive person becomes an exponential hindrance to the rest of the team over time.Martin Partners has developed a new service to sample the market for - œA-  level talent around a specific potential upgrade.

IVCA: How have the components of compensation - “ salary and bonuses - “ been evolving or changing through the economic times of late? What executive jobs are showing the most growth in this category?

TM: Comp levels are becoming very specific to the function and the role. It is becoming very hard to stereotype across industries, that does not work anymore.For example, the role of CFO in the portfolio company as well as for the VC/PE firm itself has seen significant growth. Base salaries continue to escalate for CFOs, whether internal or external.As an example, we recently conducted a CFO search for a $50mm healthcare company, and the A players in the same unique and high-demand industry niche needed a $300k base salary to make the move. If we stick with the $50mm portfolio company, the norm would be to pay $200k to attract the A player to the company, with bonus and equity. But certain industry niches have taken off and there are only so many CFOs in a niche so their demand and pay goes way up.

For the internal CFO, the key is to add value and give the partners the ability to get out of the interaction with the limited partners. If you can become the proactive voice for the limited partners and allow the partners to focus on doing deals and managing the existing portfolio companies, your value is going to go way up.

IVCA: What is your personal philosophy on what makes a good leader for executive positions, based on your experience in the recruiting field?

TM: I wrote a book called Exposing Leadership - “ available on Amazon - “ and I distill leadership success down to 20 traits. My goal was to bridge the gap between the esoteric business school leadership books and the overly-simplistic ones in the airport bookstores. I wrote it based on the knowledge I gained from doing references for 25 years in the search business. Informal references speak directly to how a leader is performing, and they get at the key success and failure attributes.I tried to capture those in the book.

IVCA: What is the outlook for the Chicago area in the second half of 2010 for recruitment and what industries would outsiders be surprised to find here?

TM: I think the Chicago market is the broadest market in the country. People complain that we are not a tech center, but we have tech, you just have to dig to find it. We are not the investment banking world of NYC, but we have investment banking. We have every industry sector represented, and that is a strength unto itself. As a generalist, there is no better place to be.We fly anywhere in the country with ease, the weather is way better than what people think, this is a great place to live and do business. There is plenty of opportunity out there, and someone is having a successful portfolio company exit as we speak.

Notwithstanding potentially punitive legislative changes, 2011 is going to come back strong.The global picture will have settled down, even real estate is going to show signs of life, and that industry is on life support.

Find Ted Martin's book, - œExposing Leadership, Redefining the Top 20 Leadership Traits-  from Amazon at this link...

http://www.amazon.com/Exposing-Leadership-Redefining-Top-Traits/dp/1439200629

Martin Partners are at http://www.martinpartners.com//