As regular readers of my blog know, once a month I try to offer some unsolicited advice to fund managers out on the capital raising trail. Today, I want to tackle the touchy topic of how to hire a great fund marketer.
Fans of “How I Met Your Mother” are likely familiar with the Vicki Mendoza line and its impact on Barney’s decision making. Leaving aside Barney’s oh-so-politically-incorrect humor on dating for a moment, it is possible to apply his matrix-based decision-making to other areas of life, like, for example, choosing a fund marketer.
The Contacts/Context Graph for Fund Marketing Success.
Hiring a marketer (or negotiating salary/bonus?) Where do you fit? (c) MJ Alternative Investment Research
On the Y-Axis I have created a Contacts scale. This measures the relative strength of the contacts your potential marketer is bringing to the table. Please note that the scale starts at 2 because, frankly, for the right price, anyone can obtain a list of investor targets from any number of sources. If that’s news to you, try Googling “Investor List” and you’ll be shocked by what you can buy.
Of course, there are contacts and then there are contacts. With lists easily available (and potentially overused and/or out of date), it is important to judge the quality of the contacts, not just the quantity, as well.
- I started with a basic list as a 2.
- A good list with some personal (not just purchased or Googled) contacts gets a 4 to 6.
- Because it’s important not just to know investors, but to know the investors who match well with the fund’s strategy and life cycle, a robust list with at least some relevant personal contacts (e.g. the right type of investors for your fund, be they individual investor, family office or institutional) gets a 6 to an 8. After all, an emerging manager who hires a public plan marketing specialist may have difficultly quickly securing the early capital they need.
- Finally, an outstanding list with deep, relevant, personal contacts who have a history of investing with the marketer gets an 8 to a 10.
The X-Axis is the Context Scale - how this individual fits in the context of my firm. Unfortunately, I had to start this scale with a -2 since there are some hires that are not only not a great fit with your organization, they are actively bad for your firm.
For example, I still remember the marketer I met more than 10 years ago who, after unsuccessfully pitching me in 5 minutes at an Opal conference cocktail hour said, and I quote, “Well, I’m here to raise assets, not to make friends. I’ll catch you later.” Or the guy who called me and my staff at Van Hedge on Fridays to ask if we were ready to invest yet. Every. Freaking. Friday. As a result of his calls, spontaneous laryngitis was common and highly contagious in our office at the end of each week.
Rest assured, folks like those will not only be unsuccessful at raising assets for your firm, they will also actively diminish your brand and reputation in the industry.
Think of it this way: I still remember the exact words from these guys after more than a decade. And while I am occasionally accused of being a little Rain Man-esque when it comes to facts, I can assure you that a bad impression lasts a really long time, no matter who you are.
The Context scale attempts to measure a number of things: sales skill, their personality fit in the overall make-up of the firm, willingness to pitch in outside of their domain, knowledge of the strategy and industry, attention to detail, compliance focus, proactive versus reactive nature, organizational skills, etc. It’s a broad scale, and I would suggest that before you start looking for a marketer you think about what elements of Context are most important to you and your firm.
So, let’s get down to brass tacks.
- If a potential hire scores below 0 on the Context line, they are firmly in the NO GO ZONE. No matter what their Contacts score look like.
- Below a 5 on both scales is what I call the Danger Zone. This may be a decent hire, but you should watch for friction within the organization and/or longer-lead time sales. A large part of their success will depend on attitude, general people skills and EQ.
- Above a 5 on the Contacts line but below a 5 on the Context line and you should consider hiring the individual as an outside contractor or a third party marketer (3PM). This will minimize friction in the organization (and any blowback outside the firm) and allow you to still capitalize on the marketer’s contacts.
- A 5 to 10 on the Context scale but low scores on Contacts means the person could be an excellent fit for the organization, but perhaps not the best marketer. They could be a tremendous addition to another area of the firm (investor relations, operations, entry level marketing) but will need time to build relationships and “season.” Understand that if you make a marketing hire in this zone, patience will likely be required.
- The Safe Zone contains good hires. They may be slower to fit in or to close business, but chances are they will get there.
- Between an 8 and a 10 on the context scale and a 6 to 8 on the contacts scale you’ll find Really Good Marketing Hires.
- If someone scores between an 8 and 10 on both scales, you should give them equity and encourage them to work at your firm forever. Actual golden handcuffs may be required.
Even, if you aren’t looking to make an internal hire, the Contacts/Context matrix works for third party marketers as well. We all know that 3PMs don’t always have the best “street cred” in our industry, but there are good choices out there. Select candidates using the Contacts/Context criteria and then rank further based on things like retainer, length of contract, trailing commission, geographic focus, etc.
Of course, there are exceptions to every rule, matrix and formula, but at least thinking through the issues raised by the Contacts/Context Matrix before making an internal or external hire should help you position your fund well above the Midas Line.
