Talent Bank

What's more, our firm has some internal funds that invest in private equities, particularly in promising young companies at the venture-capital stage, before they go public. We have a very attractive co-investment program, where, if people put in 4% of their income, we will lend them four times that amount, so that they can make a much bigger investment in those funds. And when we explain that to people, their eyes light up. Private-equity returns have been extremely strong during the past few years. And we have one of the most aggressive programs around.

Wall Street is known for its feast-and-famine cycles. How would you want to manage your people through a recession -- or through a stock-market downturn?

We're set up structurally to withstand both major boom and major bust periods. The partners are guaranteed just $60,000 a year here. Everything after that comes in the form of compensation tied to our bottom-line results. If there's no bottom line, there's no extra compensation. So we don't have a middle-management group that has to get paid regardless of the circumstances. This whole thing acts like an accordion. Our revenue could be cut in half tomorrow, and we'd still make a profit. If the whole world disintegrates on us, well, you won't have to pay quite the same bonuses that better times demand. People's alternatives aren't going to be that great.

What's more, the pursuit of excellence within our industry is something that drives many, if not most, of the professionals here. We're in a highly cyclical industry, and if your clients' stocks are way down or if the industries that you cover as an investment banker are doing poorly, then being motivated by greed isn't going to get you anywhere. People need to believe in the social attributes of this firm. They need to be charged up about coming to work every day and working the hours that this industry requires.

When you hire, what kinds of attributes do you look for in people?

Integrity, of course, is number one. A history of proven success would be number two. People have to show a strong track record at their previous employer. For younger people, raw intellect and raw communication skills matter. A lot of times you try to get really phenomenal athletes right at the beginning of their careers. You look at where they are today and then try to extrapolate what they could become. If they're fully proven and have done everything already, obviously, the price of that person is really high.

We're in the business of handicapping athletes -- at times it's almost like horse racing. But we only want people who either are world-class or have the potential of getting there. We're not interested in people that are going from a D grade to a C grade. That doesn't necessarily mean that everybody who works here went to Andover, Exeter, Harvard, or Yale. In fact, some of our most successful people come from what I would call nontraditional educational or business backgrounds.

Elaborate on that a bit. If they don't always need immaculate diplomas, what kinds of people thrive at Thomas Weisel Partners?

Flexibility is important. We're operating at the leading edge of the economy, where change is the greatest. So we ask all of our people to be very adaptive. Stock traders shouldn't plan on trading the same names forever. They might be trading an entirely new pad of stocks in six months. A research analyst who follows Microsoft might be redeployed to cover other companies where the value of his or her input might be greater. It's the same thing with our investment bankers and our salespeople.

In a growth company like ours, you're always going to have greater and newer needs. So we'll continue to take people from one area of expertise and move them to another. We want people who are willing to take on new challenges.

We also want people who thrive in an entrepreneurial culture. If people come to management and say, "Hey, I'd like to do this or that," we give them the authority -- and then we get out of their way. We don't have a lot of paper shufflers here. Hopefully, young people see that. Rather than spending a lot of time talking and thinking about doing things, people should be doing things.

You really had to scramble to get this firm started. You spent most of your career at Montgomery Securities, serving as CEO of that firm before it was sold to NationsBank in 1997. Then NationsBank merged with Bank of America. Soon after that, in late 1998, you quit and decided to set up your own firm. What helped you build Thomas Weisel Partners from a one-man sketch to a substantial firm?